英賽德 (INCY) 2007 Q1 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Incyte Corporation first quarter 2007 financial results. At this time all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Pamela Murphy, VP Investor Relations and corporate communications. Thank you Ms. Murphy. You may now begin.

Thank you and good morning everyone. With me today are Paul Friedman, Incyte's President and Chief Executive Officer; Dave Hastings, our Executive Vice President and Chief Financial Officer; and Rich Levy, Senior Vice President of drug development. We will begin with an update from Paul on progress in our drug development program, and Dave will follow with a brief overview on Incyte's first quarter financial results. We will then open up the call for Q&A.

Before beginning I would like to remind you that some of our statements during the call today, including statements regarding our plans and expectations for our drug development discovery program and our financial results and guidance, as well as potential efficacy for our compounds are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our most recent 10-K for the period ended December 31, 2006 and from time to time in our SEC documents.

Good morning, everyone. Thanks for joining us. We've made really solid progress; with respect to our development programs in the first quarter I will probably drone on a little longer than usual to get through telling you about the programs. I am going to begin with an update on the CCR5 antagonist for HIV. The lead compound is 9471, and we have completed dosing the first cohort of patients in the 14 day placebo-controlled Phase II-A trial. Treated patients in the cohort received 200 mg of 9471 once daily. We reported in January that we saw impressive and sustained reductions in viral load in the first 7 patients. The full results from all 23 patients in the cohort, 19 were on the drug and 4 were placebo will be presented at the International Aid Society meeting in July in Sidney, Australia. But I can tell you that the results of the whole cohort are entirely consistent with what we described in January. And importantly in addition to being highly efficacious, the compound was also very well-tolerated.

As I am sure you know, last week an FDA advisory committee voted unanimously in favor of approval of Maraviroc, a Pfizer's CCR5 antagonist, is the basis for its decision the panel cited the drug's strong efficacy, good safety profile as well as the need for new anti-HIV agents. I want to spend a little bit of time here comparing and contrasting Maraviroc with what we currently know about 9471 because as good as Maraviroc appears to be, we continue to believe 9471 has the potential to provide meaningful advantages over Maraviroc which needs to be dosed twice daily even when it is used with ritonavir.

9471 has what we consider a superior cokinetic profile, consistent with once daily dosing whether or not it is being used with ritonavir. Therefore, if approved 9471 would be more appropriate for first-line use where once daily regimens without ritonavir boosting of protease inhibitors dominates, as well as in second-line use where emerging new regimens may also be unlikely to require the use of a ritonavir boosted PI. Obviously in such regimens 9471 but not Maraviroc has the potential to be formulated as part of once-daily fixed-dose combinations. The 60 hour half-life of 9471 versus Maraviroc's 16 hours should also prove competitively advantageous in providing a great deal more forgiveness when patients miss a dose or two.

You may recall that in the first 7 patients who received 9471 the mean viral load drop at day 28, that is two weeks after the last dose, remained well below their baseline viral loads. And by contrast after two weeks -- two weeks after the last dose of Maraviroc the viral loads had long returned to baseline. Additionally because Maraviroc causes blood concentration related orthostatic hypotension dosing higher than the currently proposed regimens is problematic. This constraint, which we learned from the data presented at the advisory committee meeting, means that about one out of four patients who receive Maraviroc with a boosted PI did not achieve FDA defined target trough levels of 75 nanograms per milliliter.

Further, when Maraviroc was used without ritonavir in the regimens about three out of the four patients did not receive -- did not achieve the target trough concentration. Now the trough concentration of 9471 won't be fully known until later in development. However, because we haven't seen any dose limiting toxicities, and because there is a much smaller difference between the minimum and maximum blood concentration as a result of the drug's long half-life, our compound has the real potential to be dosed so that most patients are likely to achieve target trough concentrations when 9471 is given with or without ritonavir boosted protease inhibitors.

It has been noted that the dosing of Maraviroc is somewhat complicated because lower doses are required when used with boosted protease inhibitor combinations and higher doses are needed when it is used with efavirenz. It is necessary because Maraviroc is a substrate for the cytochrome p450 enzyme 3A4. Ritonavir inhibits this enzyme while efavirenz induces, and thereby increases the activity of 384. As our compound and the other CCR5 antagonist in development are also metabolized by CYP3A4 here, we wouldn't expect to have an advantage over Maraviroc. That said, dose level modification is not uncommon in HIV therapeutics, and we don't believe that it will be a meaningful deterrent to using this new class of compounds.

So to summarize, assuming the compound remains safe, we believe 9471 will be a value as a new therapy for treatment experienced HIV patients; the majority of whom have the potential to benefit from CCR5 antagonism. It also has the potential to be positioned as the preferred CCR5 antagonist for first and for second line regimens on its own and potentially as a component of fixed dose combinations.

Our plans for 9471 include continuing the Phase II-A study to evaluate two more once-daily doses, 100 mg and 300 mg. Dosing with both these cohorts has begun and completion of the study is expected this summer. In concert, we will be conducting a series of required drug interaction studies, after which we plan to start Phase II-B in the fourth quarter. The first Phase II-B will be in treatment experienced patients with a second likely to be in treatment naives.

Finally and importantly for this program our follow on CCR5 antagonist INCB15050 has completed the single dose escalation Phase I trial, the multiple dose portion will begin shortly. The PK profile of 15050 strongly suggests that this compound will also be a once daily agent.

Moving on, our lead 11-beta HSD1 inhibitor, INCB13739, is being developed as a treatment for Type II Diabetes. In January we announced positive clinical results from a Phase II-A trial in which a single dose of 13739 completely inhibited HSD1 activity in both adipose tissue in liver in six of these insulin resistant individuals. The results from this study will be published in abstract form in the June supplement to the Journal Diabetes. This will be in conjunction with the ADA meeting in June.

Just to remind you, this enzyme intracellularly converts the biologically inactive steroid cortisone into the potent biologically active hormone cortisol in key target tissues, most notably liver, muscle and fat. The increased tissue cortisol is believed to be a fundamental driver of insulin resistance, thereby increasing insulin production in the liver and inhibiting the uptake in disposal of glucose in muscle and adipose tissue. This results in elevated blood glucose levels.

In addition to Type II Diabetes, elevated tissue cortisol levels are also thought to play a key role in the development of other conditions, such as dyslipidemia, obesity, hypertension and atherosclerosis. We believe as do others, that inhibition of 11-beta HSD1 has potential to reduce insulin resistance in Type II Diabetes, leading to improved glucose control and ultimately to reduction of overall cardiovascular risk.

Last month we began a one-month Phase II-A trial in Type II diabetics. This trial is being conducted at three investigative sites and is expected to enroll 24 patients, 16 on drug, 8 on placebo. The study is testing the hypothesis that HSD1 inhibition in Type II diabetics will improve insulin sensitivity. In the trial we are using what is called a two-step insulin clamp, which is a direct measure of insulin sensitivity and the study is conducted under tightly controlled metabolic conditions. The technique involves a sequential infusion of two different levels of insulin under conditions whereby we can quantify the effects of both 13739 on hepatic insulin sensitivity as measured by glucose production, as well as on peripheral insulin sensitivity as measured by glucose uptake. If the study enrolls according to plan and we are optimistic at this point that it will, we expect to have topline results by middle of the year.

Importantly, the technique being used is the very same one that was used to evaluate the insulin sensitizing drug Actos. In the Actos study, which was by contrast only a 21-day study and involved only 9 Actos-treated patients with Type II Diabetes, the positive effects of the drug on insulin sensitivity were seen, and they were seen well before improvements in the more traditional endpoints, such as fasting plasma glucose. Based on the proven efficacy of Actos in Type II Diabetes positive results for our drug, 13739 in this two-step plan should be an important early predictor of long-term benefit of Type II diabetes. Positive results would also constitute the first reported clinical proof of concept for inhibition of 11-beta HSD1 and would support the advancement of 13739 into three-month clinical studies.

In parallel with moving 13739 forward we are progressing a backup compound through IND enabling studies and expect it to enter Phase I later this year. As we attempt to do in all our programs, we created a large portfolio of proprietary HSD1 compounds with excellent potency selectivity and PK. This increases both the probability of success of the overall program, as well as its value to prospective partners.

Moving to our sheddase inhibitor compound, INCB7839, 7839 can block all four epidermal growth factor receptor signaling pathways, EGFR 1, which is also known as HER1 and then HER2, HER3 and HER4. We continue to enroll heavily pretreated refractory cancer patients with solid tumors into a dose escalation Phase I-B, II-A study. And while we haven't reached the maximum tolerated dose we believe we are now achieving pharmacologically relevant exposures with clear biological effects, including significant reductions in circulating HER2 extracellular domain or ECD levels in our HER2 positive breast cancer patients.

ECD is produced by the action of the sheddase enzyme, and elevated plasma ECD levels which are seen in about half of HER2 positive metastatic breast cancer patients associated with a poorer clinical prognosis. The truncated piece of the HER2 receptor that remains in the cell membrane when ECD is released is called p95 HER2, the p95 is just nomenclature for the size of the molecular weight of the truncated piece.

A study by Baselga, et al. recently published in the Journal of National Cancer Institute has shown that p95 HER2 positive breast cancer patients are highly resistant to Herceptin therapy. This follows logically since a greater fraction of the HER2 receptors have been truncated by the action of sheddase there will be fewer HER2 epitopes available for Herceptin to bind. And further because the shed portion of the receptor carries the Herceptin epitope, it can decrease the effectiveness of Herceptin by binding to Herceptin in blood. Taken together, these points provide further evidence that inhibition of HER2 shedding with Incyte 7839 could well significantly improve the response rate with Herceptin.

In addition to clipping HER2, the sheddase enzyme is also responsible for generating ligands required for the activation of and the signaling through other EGFRs. In particular, the HER3 pathway which can lead to resistance to current EGFR directed therapies. The sheddase inhibition appears to be the only current EGFR targeted approach that could effectively block the HER3 pathway.

While the EGFR ligands are relatively more difficult than the HER2 extracellular domain to measure in patients we do have a limited dataset, and that set does indicate that we are having a significant impact on the generation of active EGFR ligands. These emerging biomarker data are encouraging and support our hypothesis that a sheddase inhibitor could give positive clinical outcomes and could improve the effectiveness of Herceptin and other EGFR targeted therapies. We plan to provide you with topline data on these biomarkers, as well as clinical response data sometime this summer. And we expect the more formal presentation of these data to occur later this year. This will most likely be at the San Antonio breast cancer meeting in December. And we remain currently on track to initiate two Phase II trials in breast cancer patients in the fourth quarter and possibly one other trial in another solid tumor type in 2008.

The next program I'll briefly describe is our Janus kinase or JAK program. There are four known JAK enzymes, JAK1, 2, 3 and a fourth enzyme called TYK2. We focused our efforts on developing a series of inhibitors that are moderately selective for JAK2. There is now compelling clinical data suggesting that blocking signals, signaling through the JAK pathways has a very significant therapeutic potential in inflammatory diseases, such as rheumatoid arthritis and psoriasis. There is also strong genetic evidence suggesting that blocking signaling through the JAK2 pathway in particular, may provide therapeutic benefit in myeloproliferative diseases, such as polycythemia vera, essential thrombocythemia and myeloid metaplasia.

We've filed three INDs for the JAK program in the first quarter, which I think is a testament to the organization's ability to get things done. All three have been cleared by the FDA, and we have already begun the first of a series of proof-of-concept trials, at least one and very possibly more of which could provide proof-of-concept results before year-end. In this program for competitive reasons we have not described the compounds or our clinical plans but I plan to do so as the year progresses.

Finally, for Incyte 8696, our lead CCR2 antagonist, which we retained in our agreement with Pfizer, we intend to pursue multiple sclerosis as our first indication. We filed the IND for 8696 and expect to complete our Phase I trials in healthy volunteers this year. In addition to these five programs we also have several novel discovery programs. Provided the lead compounds from these programs successfully complete IND enabling studies we intend to start clinical trials later this year or early next year and at the appropriate time I will describe these programs.

Dave is going to now review our first quarter financial results.

Thanks, Paul, and good morning, everybody. I'll start my brief overview this morning by discussing our cash position. We ended the first quarter with $304.9 million in cash and investments. Our cash use this quarter was $24.9 million. This performance is on plan and our cash guidance for the year remains a use of $88 million to $95 million. As always, this guidance excludes the in-license or purchase of products and any funds received from the Pfizer collaboration.

Another area I would like to briefly discuss this morning is our operating expenses, particularly research and development costs. Our operating expenses were in line with our expectations for this quarter. R&D expense totaled $23.9 million and although our R&D expenses can vary from quarter to quarter due to the timing of clinical expenditures, we continue to be on track to incur between $88 million and $95 million for the year. While we have an aggressive 2007 clinical development plan with multiple proof-of-concept studies, we continue to focus on fiscal discipline and prudent use of cash. This focus on cash and fiscal discipline is important in maintaining the strong financial position we have.

We completed a restructuring of our 5.5% convertible subordinated notes in 2006 and as of Q1 2007 we believe we have about three years of cash. This supports our continued investments in our growing pipeline and allows for strategic flexibility as our programs mature. And with that, I will turn the call back over to Paul.

Thanks, Dave. So before we begin the Q&A portion of the call I would like to review the timeline for some of our upcoming trials. Just to remind you again about these timelines. For our CCR5 antagonist 9471 we will present the final viral load reduction and safety data for the first cohort of patients from the Phase II-A trial at IAS in July in Sydney. We've also submitted a number of abstracts to ICAAC, which takes place in September in Chicago. We expect to complete two additional cohorts in the 14-day trial and conduct a series of drug interaction studies over the next several months. And results from these studies will most likely be submitted to the February CROI meeting in early '08. Phase II-B program will begin, we expect it to begin in the fourth quarter of the year.

For the HSD1 compound, 13739, we expect to have topline data from the one month clamp study this summer and will share that topline data with you. And we plan to submit the complete dataset for publication in peer reviewed journal. For the sheddase inhibitor 7839, we plan to submit biomarker data and preliminary data on treatment response rates to the San Antonio breast cancer conference in December. But as I said earlier, we will provide topline data sometime this summer.

We also expect to have proof-of-concept data for one, and very possibly several of our new JAK programs. And those reports to you in whatever form is appropriate; the topline are more detailed will flow out during the year as these studies complete. Given the steady flow of data this year promises to be a very important one for each of the programs and for Incyte and obviously I am looking forward to keeping you informed of our progress. So with that I would ask the operator to now open up the call for Q&A.

(OPERATOR INSTRUCTIONS) Thomas Wei, Piper Jaffray & Co.

Thanks very much. Just a couple questions on the CCR5 program. Did you say that there were going to be dose adjustments necessary for 9471? And should we think of it in the same way that with both ritonavir and Sustiva, and does that actually come from drug-drug interaction studies that you've done?

It will when we complete the drug-drug interaction studies, but our predictions are that you would have to make adjustments here. And with any of the CCR5's that we know about in development, they are all 3A4 catabolized. So they are all going to be affected by the alterations in 3A4 that would be generated by ritonavir, which will inhibit or by efavirenz. And in fact by tipranavir, which induce. So I don't think we will escape that. We will be -- we will have to make those adjustments as well.

And is that true of your backup compound, as well? Do you think that that is also a 3A4 substrate?

Yes.

And then just lastly on CCR5 for other indications beyond HIV, I am curious what you think the role of that is in two diseases like rheumatoid arthritis, particularly in the context that you had done a lot of work on chemokine receptors in RA for the CCR2 program. Can you share with us any thoughts on how we should think about CCR5 in RA?

I read your recent note following up on the advisory committee meeting, and I think you actually covered in I thought a very succinct and clear vis-a-vis the existing preclinical evidence and the clinical evidence for possible utility of antagonizing that receptor. And I think what I would say is that I think it is an interesting possibility. It is one that we are in a position to capitalize on now or at any point going forward, where it would appear to make sense to us in the grand scheme of everything else that we have going on. Our plate is pretty full right now, and I would say that the preclinical evidence is where you are looking at collagen induced arthritis models and adjuvant induced arthritis models, including a primate model is pretty interesting. And the human data where you are seeing increased synovial concentrations of ligands for CCR5, in fact aggregates of CCR5 expressing lymphocytes in synovial tissue is intriguing. And I think it is something that could turn out to be interesting. We have, again, a very nice couple of compounds. You can see where one could go in one direction and one could go in another direction and they are both once-a-day relatively low-dose compounds.

I guess what I was curious about was if you look at the work that you had done in CCR2 for rheumatoid arthritis would you say that that side of preclinical evidence or early clinical evidence whatever existed before you started the RA trial was actually stronger than the evidence supporting CCR5 in the same indication?

I would say that is true. So that is maybe one of the reasons we might not leap incredibly aggressively at this point into inflammation for CCR5. I think that does stay our enthusiasm to some degree. But it is a different cell type, and it may have totally different outcomes. And it may make sense to actually have compounds that are dual antagonists, CCR2/CCR5. You might imagine that you could make such compounds.

Thanks. That's very helpful.

Annabel Samimy, UBS.

Thanks for taking my call. I have a couple questions on the JAK2 program. Are you prioritizing the various indications that you are looking at in terms of in the JAK2 program? I think you were supposed to have three proof-of-concepts out this year, and I think we are only seeing one. And have you prioritized or reprioritized any of these programs, first of all? And I'll ask a follow-up question.

I must not have made that clear. I tried to, but we have at least, we have three INDs that we filed. We started one program. We plan to start two others during the year. And all three of them in my humble opinion have a very, very high probability of being positive studies. And all of them will yield data before the end of the year. But I think the way I worded it was we have started the first of a series, which could yield at least one and possibly more proof-of-concepts before the end of the year.

We were trying to under promise and over deliver, which is the way you are supposed to do it. But I will tell you that I think that unless the compound proves unsafe or the compounds prove unsafe at the doses that we are using or we pick wildly wrong doses I don't think either of those is going to [attain]. I think we have a very good chance of seeing positive studies in three different disease areas.

Just a follow-up to the JAK2. Can you give us some of the advantages of and disadvantages of more directed JAK2 inhibition and what (inaudible) studies and other programs to date? And is there anything that increased or more direct JAK2 inhibition would cause concerns? Is there any concern with more directed JAK2 inhibitions, is what I'm trying to say.

If you were to take JAK2 out around-the-clock all day long 100%, you would get reticulocytopenia. You would interfere with erythropoietin function. You would get anemic. So you can't do that. But if you go back and look at the Pfizer data in both psoriasis with their non-selective or actually more JAK3 selective compound, you can see that they get a nice -- they do a dose response, and even the lowest doses are very efficacious. And those doses should not be anywhere near turning JAK2 off completely. So there looks to be a therapeutic index that you simply are going to have to find with your drug in your study. And that I guess the potential for neutropenia and anemia would be, which are both reversible things that can be followed easily and cheaply with blood tests, are what you would see if you were over dosing.

But to turn the question around one of the advantages if you can deal with -- if you can titrate appropriately and deal with the potential toxicities of over dose is that you take out more globally other, more than one entity that signals through Jak/STAT pathways, with JAK2 being the JAK, because the current therapies, which are upstream and/or big molecules, they are antibodies, they take out only one ligand for any given receptor or they block only one receptor. So if you can titrate effectively, which the Pfizer data would argue that you can, then this mechanism has the potential to be significantly more effective than taking out one protein.

How difficult do you think it will be to find that therapeutic window, and do you think commercially it could cause concern that you might create anemia in these otherwise -- in these patients that otherwise are healthy?

If you created anemia in a lot of people that would not be good, but what I am saying is that it looks from the Pfizer data and from our calculations about where you have to be on that dose response curve that you can get very profound anti-inflammatory effects, far below the concentrations where you are going to significantly affect hematopoiesis.

And then one final question on the sheddase program, if I may. The clinically relevant responses that you had mentioned in a press release, are those all related to the biomarker data?

No, we've actually seen some clinical response data that we think is interesting, but we have, like many, like everybody we have investigators who are doing these studies who won't be able to report the results and so there are time when we can say more about those results. We have very relevant and very significant biomarker data, and we now have some early but very interesting clinical data, as well. Obviously it is not in dozens and dozens of people because we haven't studied those in dozens of people. But in a small group of people we have some interesting clinical results.

Okay, and you think you can get some of those -- you think you can reach maximum tolerate dose by midyear and get some topline data out there?

Yes, I think Rich, that's the plan, right? We think we're going to do that.

Yes I think that's a pretty good chance but you never know until you get there.

Okay, great. Thank you.

Eun Yang, Jefferies & Co.

Several questions. First on JAK inhibitor. Pharmacopeia and Wyeth have a compound, I think it is more on the JAK3 side, and I am just wondering if you could provide us some differentiating characteristics of theirs versus your three compounds. And when you might actually entertain partners opportunities for JAK inhibitors.

And secondly for CCR5 inhibitors the backup compound the last time you said, you guys mentioned that because the first 9471 (inaudible) you to put the backup compound on hold. But since you are studying the backup compound again; so I would like to know what the reasons behind that. And lastly, CCR2 inhibitor [8696], you mentioned the Phase I will begin sometime this year and or Phase II to begin probably toward the end of '07, beginning of next year. Phase II, the indication would be still multiple sclerosis?

I will do the last one first. The answer to that is yes. And the CCR5, what we had said about that compound is we would finish -- we would do Phase I and so we've done half of Phase I. We did the single dose so we have the multiple dose portion of Phase I to complete. And then we said we'd probably shelve it. Now the question that Thomas asked about rheumatoid arthritis and other inflammatory diseases is an interesting one, [bearing] on 15050, is you could use different compounds than the one using for HIV to study those diseases if we would decide we wanted to do that. Also, some very interesting data that people, that others have published on CCR5 antagonism in transplant. Where you can prolong dramatically in combination with certain other agents, the survival of heart transplants in Primates by using CCR5 antagonist.

So it would be good to get single and multiple dose data because you get more safety information from the 10-day multiple dose study. And then at that point if we decide which is likely that at this point our plate is full and we are not prepared to jump into inflammation or transplant disease; we probably will put it on the shelf and only bring it back off if we get a hiccup with 9471, which we haven't. Because I think that is what you were trying to get me to say is that it is better to have it. Then the other thing is if we ever -- you would have another entity that could conceivably be licensed. It would be licensed for inflammatory disease and/or transplantation but not for HIV. If you were going to license the entire program you would have a good backup, which you would characterize. So I think there is good reason to take it through multiple doses even the higher multiple doses just to secure in your own mind that you don't have safety issues. And the first question was? JAK and the Wyeth compound is more JAK3. And when would we think about -- this is a program we don't really have any interest in seeking partners for.

That could change, but this is one that is -- to us is very exciting because there are multiple places it could work, and we can run those studies right through the registration ourselves. So it would have to be a really compelling partnership offer that would come unsolicited that would make us be interested in that. The question -- I think the other part of the question may have been that what did we think about the compound that was more JAK3 oriented. That is kind of what the Pfizer compound is like.

And if you look at the totality of the data for RA, and this includes antibody data, antibodies that specifically block JAK2 pathways and don't do anything to JAK3. You put all the data together it argues that the Pfizer compound, which is only modestly selected for JAK3 and takes out JAK2 in the concentrations used, the efficacy that is being seen in those studies in our opinion -- in our strong opinion -- is occurring by shutting down JAK2 pathways, not JAK3.

Our understanding further is that the Pfizer compound was originally put into development for transplantation to prevent rejection because it is a very immunosuppressive mechanism. And as you I'm sure know immunosuppressives, especially T cell immunosuppressives don't work very well in things like RA. So we believe that the JAK3 activity that these compounds manifest is not doing much in damping down typical inflammatory markers of things like rheumatoid arthritis and that is a JAK2 mediated event.

Your three INDs that you have filed for JAK inhibitors, are they all in the same chemical series?

Yes.

Okay, and another question, if I may. On the diabetes program the multidosing study if we remember correctly there was actually near completion in January. So has it been completed, and if so when we might see some data from that study?

The study that was completed was the fat biopsy study. Then we started about 3, 4 weeks ago the one-month study, the two-step plan. We actually do have some more data from the fat biopsy study, but is that also going to be in the abstract? That data, which you've seen -- we did another dose so there's a little more data, but that is going to be just in an abstract diabetes meeting. But the data on out of the two-step clamp which is I think going to be very important data for this program because the adipose study demonstrated with unequivocally that the compound that we were using at the doses we were going to use in the two-step clamp assay, shut that enzyme down in the key tissues. So if the two-step clamp procedure is done properly and the patients take their medication, this will be a valid proof-of-concept for HSD and insulin sensitivity. And we will have topline data in the June timeframe so not that long from now.

Okay. Thanks very much.

Richard Smith, JPMorgan Chase & Co.

Good morning, everyone. Just a couple of quick questions. With respect to prior data that you've seen with 9471 what was the -- I know you don't have a DLT, but were there any common side effects you saw that were similar to Maraviroc? I know it is sort of a high background, but --.

You mean in the two weeks that we have seen the study?

Yes.

No, we saw pretty much we saw nothing.

We saw no side effects in two weeks.

You expect that with a 300 mg dose, as well?

We are hopeful that is going to be the case, as well.

Okay.

But we have given 300 mg as a single-dose already, so we are not going a higher dose and people have seen for one day. There will be a little bit more accumulation. But we're pretty confident that we are only administering doses that should be safe.

And so in particular what we have not seen orthostatic hypotension, and I don't think we should see that.

Are you doing drug-drug interactions with things like Viagra? I know that was something that came up with the panel.

That would be done much later in development. Right now we're focusing on the antiretroviral therapies that might be used in combination with 9471.

Is there any chance we might see any sort of resistance data at the IAS meeting?

There was no resistance.

All right. Thank you.

Vinny Jindal, ThinkEquity Partners.

Thanks for taking the question. First of all, the CCR5 program I was wondering if you guys have disclosed or have thoughts about what the trial design will be for the Phase II-B starting later this year. Is it going to be your traditional two-week functional monotherapy followed by a duration of add-on therapy?

You want to take that question, Rich?

The answer is no, it will not be that traditional type of study. We have very specific plans for that study. However, we have not finished discussing with FDA or investigators, and we think it is best to not comment further until we've gone through those steps. By the time we're getting ready to start that study around fourth quarter we will give the details at that time.

Okay, and then also at that program you had mentioned that this drug given the QD using has a better chance of combined ability with, for example (inaudible) or other standards of care frontline. Beyond having once-a-day, is there also features of the chemical itself that allow it to be physically combined with a pill like Atripla? Does it have not just add-on ability given QD, but does it have actually combined ability given the chemical features?

Yes. There is no reason looking at the chemistry or the anticipated dose that it would be any more likely to not -- that it would be less likely to be able to put together. From what I can tell talking to pharmaceutical people that should not be an issue. I would say that whether it would be combined with Atripla or with two [nucs] or what is not clear at this point. The fact that it is likely to be induced by efavirenz may make that particular combination problematic, not for physical reasons, but just for dosing reasons. But we have to do those drug interaction studies to know but for things like Truvada and the more usual triple combinations in one pill shouldn't be any problem.

And then you had mentioned the other competitors out there. Can you just remind us again where the later stage small molecule competitors are in the CCR5 programs for HIV?

Well, there is [perkiverok], and I think that is the only later stage one. But there are probably some early ones that Rich can --.

I think we recently saw that there may be another more late stage ones which we know very little about; I think there was a press release within the last week or so but we really don't know much about that molecule. And the others are either early stage, and then there is also some monoclonal antibodies which we think would be at a competitive disadvantage.

But the one we saw is not as late, is not as far along as [perkiverok] I don't think.

There was some conflicting information as to how far along it is, but I don't think it is -- I don't think it has been done here. I just don't have the details.

Okay. Thanks you for taking a stab at it. Actually off of CCR5 I was curious are you guys expecting any incoming milestones from Pfizer on the CCR2 program this year?

Yes, I think we will see one for sure. I guess there's a chance for probably an outside chance we will see a second one. Is that right, Dave?

Yes.

Okay, and have you guys discussed what the size of that might be or what exactly it will be tied to?

No, we haven't yet, and I think we will wait until it happens and then we'll talk about it.

Fair enough. And one last one on the diabetes. At what point do you feel like we will have matured where the benefit of partnership would make you want to partner the drug? How far do you intend to go with this program?

Well, we have active discussions going on with probably half a dozen different companies right now. And most of those were unsolicited approaches to us. If the terms that one of these companies would put on the table made sense we could do a deal now and it would be one that I think you all would be happy with. If we don't get those terms we're not going to it, as Dave pointed out we've got a lot of cash. We can take this through II-B study, the three month study that Rich was describing quite easily. And in fact, if in the timeframe that we were doing that we had some bad luck with some of the other programs, we could take it through Phase III.

Actually if you price out diabetes pivotal trials they are not so onerous that you couldn't do that. We would need a partner to sell it because we -- while we could deal with the endocrine people, the primary care people we obviously couldn't. And so at some point we would need a partner. But the right deal has to be on the table. I can tell you that we are having interesting discussions with people now, but we're not like backed in a corner because we don't have money. And so we are not going to do anything that doesn't really make good sense for us.

Fair enough. Would it be fair to assume that either you would want post Phase II type deal terms and if those are given earlier, which the quality of your program may catalize, that that would be an acceptable level of commitment from a partner?

I would think that if this current study -- this current study if it is positive -- if the study is negative I think you probably have got it write HSD1 off as a Type II Diabetes therapy. It still could work in obesity metabolic syndrome for other reasons but for Type II Diabetes I would say if the study is done right and we get indications that the blood levels were right, and we don't see an improvement in insulin sensitivity, then the hypothesis is flawed.

But assuming we see a positive result, that is a predictive study. If the compound then remains safe in longer-term studies you will see improvements in hemoglobin A1C and drops in fasting blood glucose. I don't know what the magnitude of those are, but it will be an insulin sensitizer. And so this study, positive results in this study to our way of thinking -- and this is how we presented it to people is proof-of-concept, Phase II proof-of-concept, and we would be looking for some very, very good terms.

And one last question is, is there anything limiting in the duration of animal exposure to date for the diabetes compound that would stop you from going into three-month trials at this point, or do you need to do more animal data animal work to get to longer duration studies?

Well, by the time we could get to the three-month study we won't be limited. In other words the finishing of the three, six months tox studies which are not complete yet will not be rate limiting for when we can start the human three-month study. So we don't lose any time because of those toxicology studies.

Thanks so much for taking the questions.

Adam Cutler, JMP Securities.

Thanks for taking the question. On HSD1 program I am wondering at what point will you start looking at other parameters? Cardiovascular parameters or body weight, is that something that will wait for the three months study?

I think we are looking at a variety of things in the one-month study, but I think it is -- I'll let Rich elaborate on this, but some things you have a high probability of seeing, some things modest and some things almost no possibility of seeing in a one-month study. But Rich, what would you say to that?

We are exploring how much data we could get out of a diabetes study, in which the three-month diabetes study in which most people are obese have lipid abnormalities, many will have high blood pressure, etc. Where we could see hints of the potential benefits in terms of body weight, etc. etc. But I think to actually prove that you had positive effects on body weight may take even longer trials than that. So we expect to gain preliminary information within the three months study, but think that would probably require longer studies to really know that you have a true effect on body weight, for example.

Okay, thanks. And then do we know what the current status of the Amgen HSD1 program is, and are there any others that you're aware of?

Yes, there are a number of programs, and there are actually a number of programs going on with companies that are talking to us. These programs have not progressed as well as ours. Our understanding about Amgen, I don't think we've gotten any competitive intelligence of late, but was that they took that first compound in, the Biovitrum compound, and it didn't work.

And when you look at that Biovitrum compound as I think I've said before, its potency is 20, 30-fold less than like the molecules we are currently dealing with. So it really didn't have any chance of proving the concept, and also it didn't distribute very well. Its PKA was such that it was not going to distribute into adipose tissue well.

So they learned from that and so did everybody else. And they had a second compound which went in and the report came back that PK was very good. They were pleased with the PD, and then that is the last we've heard about that compound. It has been a long time. And just by the by, we heard through the grapevine that -- and I don't know whether this is true -- but we've heard that there may be a tox issue associated with the compound and that they were going back this time possibly into the Amgen chemical series to bring forth another compound.

I don't think there are any -- I don't think they are ahead of us. They may be abreast of us with the second compound I described or they may actually be behind us. Pfizer has a compound in their lab, claims it is in Phase I, so they are a little bit behind us. Merck has a program. I would say they are probably where we are or maybe slightly ahead. And I think other programs are behind us.

And you know that some of the companies that have approached you are doing work in this area that maybe have not had as much success as they hoped. Do you have a sense for what some of the issues were, perhaps?

They don't really tell you that, but usually it is not because you can't get a compound that has potency. But it usually has to do with selectivity, bioavailability, half-life and toxicity. And it is hard to get all those things in a Venn diagram to give you the molecule that you want.

And I think the programs that I am describing for you here, as well as the CCR2 program, as well as several you haven't heard about, is a testament to the quality of the medicinal chemistry group that we have here. Very experienced, very good people. And on a per capita basis, I put them at the top compared to some of these other chemistry groups.

Great. Thanks a lot.

There are no further questions in queue. I'd like to hand the floor back over to management for any closing comments.

Okay, so I would simply say thanks again for joining us this morning, and I think you can see that there is going to be a continual flow of information beginning in around June through the remainder of the year. And much of it, in my opinion, has a high probability of being positive.

So we think this should be a very good year for us and set us up nicely for Phase II-B studies and beyond in a number of these programs. So with that, let's conclude today's call. Thank you very much.

This concludes today's teleconference. Thank you for your participation.