英賽德 (INCY) 2004 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. And welcome to the Incyte Corporation fourth quarter year-end results and corporate update conference call.

[Operator Instructions].

It is now my pleasure to introduce your host, Miss. Pam Murphy. Ma'am the floor is yours.

Good afternoon and thank you for joining us. With me today are Paul Friedman, Incyte's President and Chief Executive Officer and Dave Hastings, Incyte's Executive Vice President and Chief Financial Officer. Rich Levy our Senior Vice President of Development is also here and will be available during the Q&A session. Paul will begin with a review of our drug discovery and development programs followed by Dave's discussion of Incyte's fourth quarter and year-end financial results and provide 2005 financial guidance.

We will then open the call up for Q&A. Before beginning, we would like to remind you that the prepared statement that management will be making during this conference call are statements made in response to questions will contain predictions, estimates and other forward-looking statements that are subject to a number of risks and uncertainties that may cause our results to differ materially, including those that are described in our SEC filings. These statements include anticipated plans, timelines, cost and outcomes related to our drug discovery and clinical development program and our expectations as to financial items such as cash, revenues, expenses and the repurchase of existing debt. We encourage you to review our latest 10-Q file September 30, 2004 and our press release issued earlier today.

I will now turn the call over to Paul.

Hello, everyone. We have a number of positive developments to discuss with you today. First Reverset, our once daily world nucleoside analog RTI. We are currently conducting a six-month double blind phase IIb trial comparing 3 doses of Reverset to Placebo in the 180 treatment experienced HIV infected patients. We recently completed enrollment of this study 203 and also carried out an interim analysis involving approximately 140 of these patients.

Let me first describe the study at 203 in a little more detail. Patients who are failing their current regimens are randomized equally to one off our arms and receive once daily either 50, 100 or 200-milligrams of Reverset or placebo. For the first two weeks of the trial, patients received study medication on top of their failing regimens. So that already these two weeks we're able to see how the different doses of Reverset performed as monotherapy compared to the placebo. At the end of these two weeks, all the patients in all four randomization arms become eligible to be placed on an optimized regimen based on their study entry genotype and their treatment history. The patients then continue on their optimized regimen plus study medication for an additional 14 weeks. There is a subset of these patients who are very highly treatment experienced and could not be optimized.

They thus remain on their initial regimen for study medication for the entire 16 weeks. At the end of this second period of the study, at week 16, all of the patients initially randomized to placebo are re-randomized to receive either 100 or 200-milligrams of Reverset and continue in the study for the eight remaining weeks. This third period of the study remains blinded and is designed to give us additional safety data.

The goals of this fairly complex study are to look access the safety intolerability of Reverset over six months, determine the most appropriate dose for Reverset and help us define where and what kinds of patients the compound is likely to provide the greatest benefit. This is the information we need to finalize design of the phase III trials. We conducted the interim analysis to expedite our planning process for phase III. And as we don't want to compromise the conduct of this ongoing-blinded trial, or the eventual presentation of its findings and publications at medical meetings, at this time I am only providing top line qualitative results of the analysis.

An early look at 80 patients, who had been on the drug for at least 30 days, did not provide us with sufficient data to select a dose or to help in finalizing the design of phase III. So we conducted a second analysis in February involving about 140 patients, some of whom had been in the trial for as long as 24 weeks.

Based on this later analysis, we believe Reverset can provide sustained clinically significant anti-viral activity in treatment experienced HIV patients with multiple resistance new patients including thymidine analogue mutations or TAMs as well as m184v and k65r mutation. This observation is consistent with findings from the earlier studies of Reverset and they suggest that Reverset has the potential to become an important new therapy for HIV patients who have become resistant to antiretroviral drug.

The only adverse effective of note has been a higher than expected incidents of asymptomatic hyperlipasemia and patients who are also receiving didanosine known as ddi. Hyperlipasemia is marker of pancreatic inflammation and is particularly associated with the use of ddi. As some of you probably know, certain other nucleoside Reverse transcriptase inhibitor increased the frequency of this ddi-associated hyperlipasemia. So we are encouraged those for that this is the only adverse effective note we have seen and we are continuing all three doses in study 203. The interim analysis has provided guidance for dose selection, which we expect to confirm at the final results for the study are consistent with the interim analysis.

Our plan for manufacture of clinical supplies will allow us to accommodate any of the possible doses without incurring a delay in the program. A study of 203 concludes this summer assuming the final results remain consistent with those of the interim analysis. We plan to select a dose and proceed with an end of phase II meeting with the F.D.A. And provided during an agreement with our plans for phase III, we intend to begin these pivotal trials in the second half of this year.

Now turning to our inflammation program, we recently completed a healthy volunteer phase I study with Incyte 3284, our oral CCR2 antagonist. The study showed that the drug was well tolerated at all the doses studied and it had an excellent proforma cokinetic profile. The study also included an efficacy surrogate with known as delayed DTA skin test. We observed decreases in DTA responses similar to those seen in our animal studies. So we believe this compound has great potential as an oral treatment for chronic inflammatory conditions and we plan to launch two 28-daytrials of 3284 in the first half of this year. One in patients with rheumatoid arthritis and in obese patients with insulin resistance. Both will studies will focus on safety, but could yield information about efficacy trends. The rationale for testing the CCR2 antagonist and rheumatid arthritis is based on preclinical studies, which show that the antagonism of CCR2 signaling can prevent macrophage accumulation in joints and improve rheumatoid arthritis symptoms.

The rational for pursuing insulin resistance in type II diabetes is quite intriguing. When rodents are fed very high fat diets and become obese, the density of macrophages in adipose tissue that is the number of macrophages per volume of fat increases. These macrophages secrete inflammatory mediators, which cause the animals to be insulin resistant and then diabetic. Mice genetically lacking CCR2 do not accumulate macrophages in fact and did not become insulin resistant as they gain weight on the high fat diet. We have shown recently that the CCR2 inhibitors can both prevent on set of insulin resistance and diabetes in obese rats as well as reverse the insulin resistance that is already developed in these rats. We believe that the ability of the CCR2 antagonists to prevent influx of macrophages into the fat accounts for these findings. Our phase 2a study will be the first step in testing whether the CCR2 antagonist can be used to treat diseases such as insulin resistant type II diabetes and a related condition known as the metabolic syndrome.

Our third clinical program is in cancer and involves an orally available inhibitor insight 7839, which has the potential to treat solid tumors by blocking the signaling pathways of epidermal growth factor receptors. Increased epidermal growth factor receptors signaling is associated with a number of prevalent cancers, including breast, non-small cell lung, colon and head and neck cancer. We have recently received clearance from the F.D.A. to begin phase I N healthy volunteers and we plan to launch this study next month and hope to move into phase II trials in breast and possibly other cancers during the second half of the year.

Finally in keeping with our commitment to build a strong and diverse pipeline, we continually evaluate potential new drug targets. For these exploratory efforts, we've recently added three new programs. One is another HIV program, while the second and third involve new treatments for diabetes and cancer respectively. I am confident our work this year will yield valuable information about the therapeutic potential of our pipeline and bring us new opportunities to demonstrate our ability to create important new medicines and I look forward to keeping you apprised of progress.

Now I'm going to turn the presentation over to Dave Hastings, our CFO to describe our results from last year and our financial guidance for this year.

Thanks, Paul and good afternoon, everybody. This afternoon I will briefly review our financial results for the fourth quarter and year ended 2004. And then I will provide financial guidance for 2005. Now our financial results for the quarter in the year. Our ending cash balance of December 31, 2004 was approximately $470 million, which reflects the net proceeds of 242.5 million from our 3.5% convertible subordinate note offering, 83.3 million of net proceeds from the sale of nine million shares and a public offering at 925 per share and our net use of cash of 111.5million for 2004.

In addition, our cash balance reflects our repurchase of 38.4million of 5.5% of convertible subordinate notes in the 3rd quarter of 2004. Our use of cash is below our guidance of a use between 120 and 130 million due to our continued focus on effective cash management particularly as it related to the transition of operation from Palo Alto to Wellington.

Before we review the results of operations, it's important to note that due to the sales of the assets of the Proteome subsidiary in January 2005, we have reclassified all of the financial results for Proteome onto one item called loss from discontinued operations. The impact of this reclassification on our reported results includes a reclassification of 2004 revenues of 1 million and 4.4 million for the fourth quarter and full year ended December 31, 2004. A reclassification of research and development expense of 1 million and 4.2 million for the fourth quarter and full year ended December 31, 2004.

And a reclassification of total selling, general, and administrative of 300,000 and 1.4 million for the fourth quarter and full year ended December 31, 2004. So with that said I will now review our 2004 results of operations.

Revenues for the quarter were 2.3 million and for the full year were 14.1 million. The company's net loss for the fourth quarter and full year 2004 was 37.5 million or$0.47 per share and164.8 million or $2.21 per share. The fourth quarter of 2004 loss includes a non-cash charge of 12.1 million to adjust the carrying value of previously capitalized cost associated with the preparation, prosecution and maintenance of our gene pattern portfolio. Included in the full year 2004 net loss, our restructuring and related charges of 42.1 million, which are primarily associated with the closure of the company's facilities in Palo Alto. Also included is our net loss for the year a charge of 5.2 million, recorded as a result that right down related to reduce market valuation and to chief investments that Incyte holds in other companies. This charge is included in interest income and other income nets.

Our R&D expense was 21.1million for the quarter and 83.3 for the year. As a reminder the first quarter of 2004 includes expenses from the Palo Alto operations, as the closure of those facilities was not affected until April 2. Our selling, general and administrative expenses were 4.6million for the quarter and 20.6 million for the year. In terms of other income expense our interest income of 2.5 million in the fourth quarter and 8.2 million for the year. Our interest expense was 4.2 million for the fourth quarter and 17.2 million for the year.

Now for the 2005 financial guidance. In terms of cash, we will expect to use between a 120 and 130 million in 2005. This guidance includes the use of about 6 million for net lease-related cost in our closed California facilities. This guidance excludes any possible in-license or purchase of products in clinical development for the repurchase of any of our 5.5% convertible subordinated notes. As we stated in the past we still intent on incrementally reducing the balance on our 5.5% notes overtime. We expect our 2005 revenue to be in the range of $2 to $4 million. This guidance includes only revenue for which we have contractural commitment.

In terms of our research and development expense, we expect that to range from 98 to 102 million in 2005. Our expected increase in R&D reflects the fact that we now have three compounds in various stages of clinical development. We expect our selling, general and administrative expense to range from 12 to 14 million in 2005. It's important to note that our operating expense guidance does not include the impact of these share-based payment rule, which requires public companies to measure a wide range of shared-based compensation arrangements including share options, restricted share plans, performance based awards, share appreciate rights and employed share repurchase plans.

And talking about the income and expenses we expect our interest income to range from 6 to 7 million in 2005 while interest expense is expected to approximate 18 million. This guidance does not include any potential adjustments related to our strategic investments nor does it include the impact of any potential reduction of 5.5% convertible subordinated notes, which is likely to occur during the year.

With that I will now turn the call back over to Paul.

Thanks, Dave. Operator, I think we are ready to open the call for questions now.

Thank you.

[Operator Instructions].

Our first question is coming from Thomas Wei of Piper Jeffray.

Thanks very much. I had a question on the ddi interaction. Can you give us a sense as to what proportion of patients enrolled in the trial had ddi as a part of their ultimate background regimen?

It's about 20%. We have no indication at this point, Thomas that -- or no definitive information that would definitively contra indicate using the two agents together. We are -- as you know, cannot Reverset by what is very specific renal interaction raises the blood levels. Is that wrong, Rich?

Yes. Sure. It's surely probably halfway interaction.

Right. And we don't -- since our drug is a Primatene, I doubt that we are going to see that. But we are going to a PK interaction study to see whether or not we raise the levels of ddi. At the moment, the -- a symptomatic hypoglycemia that we are see suggest is not a terribly unusual finding in the HIV infected patients and certainly not in those treated with NRTI. So, we don't know how much of an impact this would make marketwise if in fact it turned out that the use of two drugs together were contraindicated. Currently about 18% to 20% of patients who are treatment-experienced are on ddi. The use of ddi is decreasing annually.

I think in the February 2005, Morgan Stanley report year-over-year decrease was something like 40%. So, by the time Reverset were on the market for those - that subset a patients who would be unable to be on both, Reverset maybe the better of the two at that time to prescribe for that patient and the overall impact is as we anticipated in the worst case scenario where the two drugs couldn't be used together would be a diminution in the market share of something less than 10%.

Maybe a question on profits into this new (indiscernible) both related to ddi and then for any other reasons? Have you seen any tangible rates of drop out in the study?

Rich do you want to answer that.

Yeah, the dropout rate has been low. We had been asking people who developed this type of acatalasemia he dropout, although it's not clear that would be necessary if we understood this better. We are not going to give a number at this point.

I will jump back in queue. Thanks.

Thank you. Our next question is coming from David Witzke of SunTrust Robinson Humphrey.

Yeah. Thanks for taking my call. I understand you are not give viral load range, but I wonder if at all possible you can rank order of the three doses, anything you are seeing dose-related viral load reduction?

I can't give you data that will em payroll the blinded aspect of the study. You don't want that, we don't want that. So, what I can tell you, and I don't want my answers because I'm avoiding answering something to come across as if the data isn't good or whatever. It's just that we are not going to be anything but conservative with respect to ensuring that the study completes successfully.

In the first two weeks, we saw the dose response relationship that we reported in the phase 2a study and the quantity of viral load drop their was comparable to what we saw in the phase 2a study. With respect to a dose response, we are seeing a dose response, but and so we are getting some guidance towards the dose that we would pick for our pivotal trials. As I have said before, we would want to go with a highest safe dose because that gives the best coverage. But we see good viral load drops in the study at all doses when you look in the first two weeks. Beyond that, it imperials the study for me to get more quantitative in what I have just told you.

Well, that's helpful. And regarding the encouraging of 65 RQ this company of K65R patients and you have enough information as to various doses the way you cover that or are you seeing a dose response on that mutation as well?

Well, we haven't seen too many people with K65R and as I have tried to explain a number of times in the patient that we will see, the treatment-experienced patients, especially those that develop a K65R as when they are on first line therapy with Truvada, the most sensible combination at that point assuming Reverset makes it, would be Reverset and AZT and as you know AZT covers K65R pretty easily. Having said that, we have seen a few subjects who entered the study with K65R and seen significant viral load drop in several such patients during the first two weeks of therapy. When the only change is the addition of Reverset. We haven't seen enough for me to say anything I think significant about the dose response relationship and I think again, that would not be a good place for me to go anyway in answering your question.

And then it looks easier if I may, just an update on formulation work there and do you have a stable formulation and what are you going to use in the two phase 2a studies, the formulation used in phase one or another formulation?

Yeah. We have what looks like a quite stable salt form. We are making tablet formulations of the salt form. We are going to use in the one-month studies the formulation we already have with the initial salt form that we had never intended on taking through into the pivotals or for commercialization, but the other salt form I'm referring to is one that we anticipate will be used for the larger trials and commercialing.

And then finally, the unfortunate VLA-4 in use today and does this in any way change how you it development strategy the CCR2?

Yeah, so, that is unfortunate, but I would say -- my own opinion in reading this and thinking about it is I think the -- I think although its been a bad day for Incyte and VLA. I think it's still early days to write off the VLA-4 mechanism. My reading of the two long-term trials that they have ongoing is the one trial is obviously with Avanex and one is without. If you look at the one-year results both in the relapse rate in the new lesions with MRI, the results were pretty much identical. The real issues here and again I really don't know the answer here is, what the denominator is these are the two patients who have developed a multiple leukoencephalopathy.

But it's due to the combination. It would certainly not preclude the VLA-4 antibody from being successful in its own right. I think it's early days. There are number of reasons why the CCR2 mechanism may -- there a number of differences between the antibody against VLA-4 and the CCR2 mechanism. So, first, if cells, macrophage, monocytes or lymphocytes that are coated with the antibody to VLA-4 make it into the CNS, one can envision those being taken up and destroyed by glial cells it's conceivable that it's the antibody purse that causes the issue.

But more importantly, the VLA-4 antibody takes out not only monocytes but prevents lymphocytes from trafficking especially T cells. And if you look in these patients, the actual lymphocyte counts in the peripheral blood are up because of the effectiveness of the antibody in preventing normal trafficking of lymphocytes. We are very selective for the monocyte. We are a small molecule and we again unlike the antibody do not need to take this target out a 100% at a time to see maximum efficacy in our models. Now having said all that, the results on the VLA-4 antibody reported today certainly give one pause before jumping into a large set of studies with multiple sclerosis.

Especially when you consider the fact that these patients were on drugs for two years or more before these reasons began to appear. So, we will monitor developments. With biogenetic elan these are their antibody and based on what comes out of their public reports, consider whether or not multiple sclerosis would be an indication that would be very high on our priority list.

That's helpful. Thank you.

Our next question is coming from Thomas Wei of Piper Jeffray.

Thanks very much. I had a couple of follow-ups, one of which was in terms of the formulation work that you were proposing to do with Reverset. Where were you on getting around the food restriction?

We have a formulation that we have tested and it's one that we have chosen for our phase 3's and commercialization. The food effect is substantially and I mean substantially reduced. It's not eliminated completely. We have additional studies to do to determine the recommendation for dosing with respect to timing around meals. We made a lot of progress.

And on some of the other side effects in the study -- is that preclinical works adjusted that in some species with myelosuppressive effect and some pigmentation abnormalities, are you seeing ant of that in your interim analysis.

No, we have seen absolutely nothing. No bone marrow, no liver, no GI, no pigmentary in continence. There was one patient in the study who had (indiscernible) elevations of ALTs who normalized I think slightly above normal and whose levels came back down into the normal range without the patient changing whatever is the patient was on.

Can you give us any sense in the base line demographics of the population, I remember the design correctly, there was a cutoff that limited the proportion of patients who were in the non-optimized background regimen group and I think it was 50%.

Right.

Do you know what the actual percentage turned out to be?

Yes. 70% of the patients optimized and 30% have not. Or could not.

All right.

Thank you. Our next question is from Eun Yang of Wells Fargo.

Thanks. Regarding the levels of viral reduction that you were seeing in the first two weeks of the trial, I'm just wondering when you said that based on 140 patients and about 70% of the patients have optimized regimen, do you see that sustained viral reduction from the first two weeks or do you actually see a further decreases in viral reduction after optimization?

You want to answer that, Rich?

Yes. So remember you got the optimized patients and the non-optimized patients. The patient who add new drugs after the two weeks, you generally see a significant further reduction if they can add good new drugs. The patient that don't optimize, you do see some further reduction after first two weeks. On average most of the reduction in that you will see, you so see within the first two weeks, but not all of it.

Okay. The second question is regarding the hyperlipasemia that you have seen in combination with DDI. I'm just wondering if you have any information whether you can provide this level of hyperlipasemia is dose dependent with Reverset.

What we can say is there is somewhat of a dose dependence.

The last question that I have is regarding CCR2 inhibitors. I am asking it differently. In light of cost to safety concerns, I'm just wondering whether you have seen more interest in (indiscernible) to programs from potential partners.

Can you repeat that, please?

In light of the Cox 2 inhibitors safety concerns, I'm thinking that the drug is targeting new targets and cause more interest among the pharma companies. I am wondering given what happened with the Cox 2 inhibitors, since you are developing new target, CRR2 inhibitors, whether you have gotten some more interest from potential partners.

We actually have had a lot of interest all along. There has been an up tick with new companies expressing interest in the last several months. We are having some very interesting discussions with a number of companies at this point. Again, as I said all along. We think this program has great value. We are -- not flush with cash, but have adequate cash to not be in a hurry to partner the program if we don't get a deal that we reflects the potential value of the program. Again, I don't want to put a time limit on when we will partner the program. There will come a time when we will. I would restate that we are having some hopefully very interesting conversations with some interesting companies right now. We hope those conversations will be fruitful in the end.

You think they will probably see some phase 2-a data for CCR2 inhibitors some time in the second half of this year?

It's one of our objectives, actually to have the data from the two studies I referred to and I think they are mentioned in the press release in the second half of this year.

Thank you very much.

Thank you. Our next question is coming from Annibale Menni (ph) of UBS.

Thanks for taking my call. To go back to the interim analysis, I was under the impression that one of the primary goal was to identify the dose. So -- which was down with the 80 patients that you thought of since. There was a trend with 140 patients that you may have some kind of dose identified. What was the specific thing that was missing from the 80 patient that you found in the 140 patient that gave you more comfort with the dose?

So I think we -- when we looked at the 80 patients, there were a lot of --when the 80th patient completed at least four weeks of therapy, we had a lot of people who were skewed in the 4, 5, 6-week area who had only been optimized if they could be optimized for two to three weeks. The data just hadn't settled out enough at that point. We looked too soon.

Okay. And is the inability to specifically choose that dose more of a safety issue related to hyperlipasemia or was it the viral reduction issue? What is that specific that you are looking for to be (indiscernible)?

They hadn't separated out enough at that point because everybody was bunched early in weeks on the drug. It had nothing do with hyperlipasemia, which is a symptomatic.

Right.

Let me say something else about that since you asked. We have had the opportunity to consult with some pancreas experts. In addition seeing the lipase levels -- amylase levels bounce around a quite a bit in HIV patients, the pace of -- if you get pancreatitis, you get the symptoms when you get the enzyme elevations. When we say a symptomatic, hyperlipasemia the opinion of the pancreas experts is that it's a very, very low probability that people with this chemical abnormality will go on and develop acute or chronic pancreatitis.

That's just to clarify something I probably didn't answer completely in the beginning, but to come back to what you said, the light pace result had absolutely nothing do with the inability to get guidance from the 80 patients. They were all kinds of skewed towards not being on in their arms long enough to let the data settle out and separate.

Okay. With the dose selection, your timelines are not necessarily changing with the dose selection. You are still going to complete the trial on time and your design will be -- you are still able to design the trial and be able to initiate as you expected earlier?

Yes. What we said, we have always said these timelines are very aggressive. They are very aggressive. We still plan to have the study done in June. Again, making the assumption we have no reason to think that the interim analysis will not be recapitulated in the final analysis, but assuming the final analysis shows the same thing that is we are seeing in the interim analysis, we have planned to have an end of phase two meeting late this summer and assuming that they don't make us come back to the well several times, the changes or recommendations from the FDA are once that we can turn around relatively quickly. We still plan to start phase three in the fall. Our timelines have not changed, but they are aggressive timelines.

Okay. One more question on the hyperlipasemia, which another NRTI have shown similar reactions with DDI and to what extent are they necessarily dose-limiting or are they continuing to track them?

Well the two I know about and Rich may know of others is the Tanofovere (ph) interaction where -- what you do there -- the usual dose of DDI 400 and you reduce it to 250 when they are on Tanofovere at the same time. I think D14 and DDI when you put those two together, you get more hyperlipasemia. I don't know of any others. Are there others?

Those are the main two. There is no clear recommendation. Different people do different things different fact. They see hyperlipasemia what they actually do in clinical practice. Since this is anew drug, we are being conservative and stopping the drug, but that doesn't necessarily mean that's what we will do after we got more data to confirm that it's safe to continue.

Okay, great. Thanks for taking my questions.

Thank you. Our next question is coming from Thomas Wei of Piper Jeffray. Your line is live.

Sorry about that. I thought I had gotten myself out of the queue, but as long as I got you, one other question on the development of resistance to Reverset. Have you seen that and can you give us details on what causes resistance?

So we didn't specifically look at that in the interim analysis because it would be way too early to do that. The soonest that we could have any relevant data on the mutations would be at end of the study and I would say that even at the end of this study, only 180 patients, 35 who are not on Reverset and it's not certain a pattern will manifest itself. It typically takes some hundreds of patients to see this pattern, particularly on those who have failed prior therapy or already have developers of mutations. There is nothing that's like come right out and hit us in the face, which is I think encouraging. We are seeing sustained anti-viral activity. The earliest we would begin to get hints of any of those issues would be at the end of this study.

Thanks.

Thank you.

[Operator Instructions]

Thank you. Our next question is from Sharon Seiler of Punk Ziegel and Company.

Most of my questions on Reverset have been asked and answered. Can you give us some more detail about on the new compounds you plan to bring forward?

The Sheddase compound is as I said is going into phase one.

I was discussing that you mentioned you had three new compounds behind the Sheddase, the CCR2 and Reverset.

I can't identify that the target (inaudible-technical difficulty) for competitive reasons, but I will tell you that we are in the midst of a formal safety assessment study on the HIV compound. We haven't finished that study yet and we had said before that once we know the out come of the safety study, assuming we are going forward with an I&D, we will identify the target and talk in more detail about it. The other two, what I will say is we are very close to nominating a development candidate for the diabetes target and we are tantalizingly close on the cancer target, but we are not quite over the last hurdle. I just think it hurts us competitively to reveal what the targets are at this time.

Okay. Thank you.

Thank you. Our next question is coming from Sapna Srivastava of Morgan Stanley.

Hi, it's actually Arnond Vongvanij on his behalf. Just two or three quick follow-ups. First of all when the trial is completed by the end of June, let's say, will you be presenting the top-line complete data in a press release or will you wait for a conference that's the first one. Secondly, at what stage could we be definitively or we will be assured that the phase III would begin or is that continued upon phase, end of phase II discussion with the FDR? Could you let's say at the end of phase two, if you saw positive enough data, could you just tell us that you are definitely starting phase III by the end of year lets say and lastly, this is the last question. The incidence of hypoglycemia, was that only seen in combination with didanosine? That's it. Thank you.

Okay. The first question we will present that in a scientific forum. So, we wouldn't just send it out in a press release in June. We are still scheduled to present data at the IAS meeting in Rio in July. That will be the interim analysis. There is a late breaker deadline that we are waiting for. We have until mid-June to submit an abstract. And because you know this will allow us to involve the investigators in the abstract preparation without prematurely divulging interim data to the investigators and undermine the study, the integrity of study.

We are waiting to put a late breaker and assuming a late breaker abstract is accepted, we will present at the meeting. That's one thing. What was the second question? The -- will we go into phase III. So, what we tried to say in the presentation in the press release that as we look at the data that we have, if we see the same positive trends that we are seeing now at the end of this study, it is our full intent to go into phase III as long as the FDA doesn't have an objection to our going. I think that's an unlikely scenario. They may want modifications to the phase III proposed trials, but I think it would be highly unusual unless you know we are totally off base and the package that we bring to them that they would deny us the ability to go into phase III.

So, that's about as strong as I can be with the data that we have. We have no reason to believe at this point that the final data will not reflect the same types of results that we are now seeing. What I think -- I think when we get to the end of the study, we will say again it will be as positive as we can be before getting the official blessing from the FDA. Rich?

Yeah, I think your question asked about timelines. So I think it would be likely we saw the trends we want to be able to see, we would know we would be able to go to phase III you know will often depend upon the amount of changes in terms of the actual timing of the start. Paul said before as to whether they are easy to fix or whether there is something that would take longer before we could actually start.

Thank you. That's very helpful and just a quick reminder I asked about hypoglycemia if it's only seen with didanosine?

Yeah. There is, there are-- there it's an incidence without ddi of a couple of percent. 2% to 3%. 2.6%. That's you know that's not unusual in this class of drugs.

Okay. Thank you.

Basically like if you want one individual, two individuals out of like 30 or something like that.

No. Two out of 84.

Two out of 84. Sorry. Two out of 84.

Thank you.

Thank you.

[Operator Instructions].

So if there aren't any more questions, I would like to thank you all for your time today, especially in light of what I'm sure has been a very busy day for some of you around Incyte and Elan. And we appreciate your interest. I fully expect that this year will be at least as productive as last and I look forward to keeping you updated on our progress. So, thank you again and look forward to talking to you soon.

Thank you and thank you, callers. That does conclude today's conference. You may disconnect your lines at this time and have a wonderful day.