Larimar Therapeutics Inc (LRMR) 2015 Q4 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Zafgen fourth-quarter 2015 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions).

I would now like to introduce your host for today's conference, Miss Laura Perry of Argot Partners. Ma'am, you may begin.

Welcome and thank you for joining us for Zafgen's conference call to discuss the Company's fourth-quarter and full-year 2015 financial results. Today you will hear from Dr. Tom Hughes, Zafgen's Chief Executive Officer, who will provide an update on the Company's efforts to resolve the beloranib clinical hold. Dr. Dennis Kim, Chief Medical Officer, will then review the recently reported data from the ZAF-311 and ZAF-203 trials. Patty Allen, Chief Financial Officer, will discuss 2015 financial results. After their formal remarks, management, including Patrick Lostau, President, and Alicia Secor, Chief Commercial Officer, will be available to take your questions.

Please note that the slides provided for this call can be accessed at www.Zafgen.com.

Before we begin, on Slide 2 is a reminder that the estimates and other forward-looking statements included in this call represent the Company's views as of today, March 9, 2016. Zafgen disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's press release as well as Zafgen's filings with the SEC for information concerning risk factors that could cause actual results to differ materially from those expressed or implied by such statements. Please also note that this call is being simultaneously webcast online.

I will now turn the call over to Dr. Tom Hughes. Tom?

Thank you Laura. Good afternoon, everyone, and thank you for joining us for our call to review our fourth-quarter and full-year financial results and to provide a corporate update.

The top priority of Zafgen is resolving the clinical hold for beloranib instituted in December 2015 and determining a path forward for beloranib in Prader-Willi syndrome, or PWS. Over the past few months, we've made tangible progress with the effort and we believe that this will be -- that we will be well positioned to go back to the FDA in the coming months with a strong data package, additional context on the incidence of thrombosis observed in our trials, and a risk management for beloranib in PWS.

The clinical data from both the ZAF-311 and ZAF-203 clinical trials disclosed in January and February 2016 represent critical information needed to support the efficacy proposition for a briefing book for the agency and to further inform the safety assessment of the drug.

Turning to Slide 5, to that end, in January we are pleased to report the robust efficacy results from our pivotal Phase III best PWS ZAF-311 trial. The study achieved both of its co-primary endpoints, making beloranib the first investigational treatment to improve both hyperphasia-related behaviors and body weight, two hallmark challenges affecting patients with PWS.

Just last month, we reported positive topline data from our Phase IIb ZAF-203 study evaluating beloranib in severe obesity complicated by type II diabetes. Treatment with beloranib produced statistically significant and clinically meaningful improvements in both body weight and glycemic control in this difficult to treat patient population. These efficacy results provided powerful confirmation of the thesis on which Zafgen was founded that MetAP2 inhibition could significantly impact body weight and glycemic parameters in people with severe and complex metabolic disorders. These data also contribute to the safety database in high-risk patients. With data in hand from these two trials, we have additional information on beloranib's efficacy, safety, and tolerability that provides greater perspective on the integrated benefit of this profile of the drug in a high-risk population such as PWS.

Turning to Slide 6, while we remain enthusiastic about beloranib, our commitment to patient safety is paramount, and so we have undertaken a comprehensive multifaceted approach to advance our understanding of the thrombotic events observed in our trials and develop a potential risk mitigation strategy for beloranib in PWS.

First, we are analyzing samples from both ZAF-311 and ZAF-203 to assess baseline thrombotic state of these two study populations, and their thrombosis parameters during and following treatment with placebo or beloranib. These analyses, together with a full battery of in vitro and in vivo studies that is nearing completion, will inform whether and how thrombotic parameters may be influenced during beloranib treatment, and to better understand the context in which thrombotic events have occurred.

We are also working to understand the incidence of thrombotic events as drivers of mortality and severe morbidity in patients affected by PWS. We are reviewing the scientific literature and data from a natural history study as well as mining insurance databases to better understand the importance of thromboembolism as a driver of morbidity and mortality in this unique population of patients. Given the depth and breadth of these various studies and analyses, we anticipate having a rich context to draw from regarding thrombosis biology in PWS patients as well as possible changes that might occur following initiation of treatment with beloranib, and what blood markers might be a value in monitoring for thrombotic disease.

Our goal is to identify whether safety can be managed with proper screening and monitoring protocols, or with prophylactic treatment with antithrombotic agents or some combination of those options. We have consulted with leading experts in thrombosis, PWS, and regulatory strategy and we are triangulating on an approach to manage thrombosis in this unique patient population, which is clearly at increased risk of thrombotic events relative to the general population. This work will ultimately inform a proposed risk mitigation strategy for beloranib in PWS. We are pleased with the progress we've made and we believe we are well-positioned to submit the complete briefing book to the FDA within the coming months.

Let me now turn the call over to Dennis for a brief recap of the data from our ZAF-311 and ZAF-203 studies. Dennis?

Thanks Tom. Today, I want to provide a brief recap of some of the key takeaways from our two recently completed studies, beginning with the best PWS or ZAF-311 Phase III clinical trial.

As a reminder, we reported topline data from the six-month randomized treatment period, which compared to two -- which compared two doses of beloranib, 2.4 and 1.8 milligrams, to placebo. The trial design is noted on Slide 8.

In agreement with the FDA, we analyzed data utilizing a mixed model repeated measures, or MMRM, approach, to account for any missing data for the ITT population, including the patients who didn't have an opportunity to complete 26 weeks of randomized treatment due to our suspension of dosing following the partial clinical hold in October.

As Tom mentioned, the clinical trial achieved both co-primary endpoints, percent change in body weight and absolute change in hyperphasia related behavior as measured by HQCT total score compared to placebo.

Slide 9 shows the efficacy data which we have detailed in a prior call. For the body weight endpoint, compared to the placebo group, which showed gradual weight gain throughout the course of the trial, both beloranib treated groups had statistically and clinically significant weight loss that was progressive and sustained. The placebo adjusted weight loss result was approximately 9%. The hyperphasia data is consistent with the weight loss data with a response observed early in the treatment period and that is sustained over the course of the study. We have had the opportunity to review these results with the principal investigators of the study and PWS key opinion leaders. They have strongly endorsed the perspective that treatment with beloranib resulted in a clinical benefit patients for both hyperphasia related behaviors and their obesity, two hallmarks of the disease for which there are no treatments.

Turning to the safety slide, or safety data on Slide 10, the most common AEs which we define as a greater than 10% incidence rate in the combined beloranib arms included injection site bruising, aggression and hyperphasia, all generally of mild intensity and transient nature. Of these, only injection site bruising was notable as being reported more frequently in the beloranib groups compared to placebo.

There were a total of five serious adverse events, or SAEs, including one pulmonary embolism in the 1.8 milligrams beloranib group which resulted in a patient death. As you can see, we had six patients in the beloranib treatment group withdraw early due to AEs. Many of these adverse events, specifically psychiatric disorders, are commonly observed as background comorbidities in PWS patients. At the end of the randomized human period, there were no clinically significant abnormal patterns regarding laboratory values, vital signs or ECG findings.

Let's turn now to the data from our ZAF-203 study in patients who are both severely obese with type II diabetes but were poorly controlled on non-insulin treatments. Turning to Slide 11, the ZAF-203 study was a Phase II randomized double-blind parallel comparison study of two doses of beloranib versus placebo for 26 weeks with an additional 26-week blinded controlled treatment period. Patients were randomized to receive beloranib at 1.8 milligrams, 1.2 milligrams, or placebo.

Following the partial clinical hold that was instituted in October 2015, we decided to stop dosing in the ZAF-203 trial and collect information available for six months of treatments. At the time, we had over 60 patients who had completed six months of randomized treatment, which was more than enough to evaluate body weight and HbA1c changes in a robust manner.

We also reported safety results for the full cohort of over 150 patients enrolled in the trial. The primary efficacy endpoint was absolute and percent weight loss at week 26. As you can see on Slide 12, the placebo group noted in gray lost 3.1% of their body weight through week 26, likely due to the diet and exercise plan that was implanted through the investigators and study sites. For the beloranib treatment groups, we saw an approximately 13% reduction in body weight from baseline. Both results were highly statistically significant with a P value of less than 0.0001 for both dose groups.

When the results are examined in detail, we observe highly significant body weight reductions that is apparent at week four, the earliest time point of weight measurement after initiating study drug. This is consistent with results from our prior trials. Moreover, at week 26, for both treatment groups, it appears that patients are continuing to lose weight with no evidence of plateau.

To provide some context on these efficacy results, patients with type II diabetes tend to lose weight at a diminished rate and amount in response to a given therapy versus obese patients without type II diabetes. Yet, with beloranib, we observed approximately 13% of progressive weight reduction from baseline, a compelling result only after six months of treatment.

Let us now turn to the data for glycemic control, a key secondary endpoint, on Slide 13. Similar to the weight loss data, we saw a significant and progressive reduction in HbA1c for patients treated with beloranib at six months with both dose groups achieving a mean HbA1c reduction of 2% from baseline, achieving endpoint HbA1c of 6.3% at 26 weeks. This translates to a vast majority of patients reaching target A1c goals of 7% or 6.5%. Similar to that observed with body weight reduction, HbA1c improvement at week 26 appears to be decreasing without evidence of a plateau. We see the differences between the treatment and placebo groups early on at week four and the results were highly statistically significant with P values of less than 0.0001.

Turning to safety on Slide 14, as a reminder, we had 152 patients in the safety population. The most common AEs were upper repertory tract infection, diarrhea and injection site bruising. These were generally mild and transient in nature and occurred at comparable incidence rates between both beloranib and placebo treated patients. There were a total of nine SAEs and 10 patients in the beloranib treatment groups withdrew early due to AE compared to two patients in the placebo group. The majority of AEs were mild or moderate in nature. And consistent with prior beloranib clinical studies in conventional obesity, the most common cause of AEs leading to early withdrawal were sleep-related. Sleep-related issues have not led to withdrawals in our clinical trials in people with PWS, even at the 2.4 milligram dose.

As previously disclosed and summarized in Slide 15, across the completed trials comprising the beloranib clinical program, there has been an imbalance of venous thromboembolic events, or VTEs, reported in patients treated with beloranib versus placebo. This includes one fatal case of pulmonary embolism during the randomized portion of the best PWS study as well as a second patient death associated with pulmonary embolism and two cases of deep vein thrombosis during the open label extension portion of the best PWS study.

In the ZAF-203 study, we have had three VTEs. As Tom mentioned, we are committed to better understanding the VTEs observed in our trials and are working with experts in PWS and thrombosis to advance this effort.

In summary, for both studies, we have achieved compelling efficacy results in two difficult to treat populations with limited treatment options. With the best PWS data, beloranib represents the first investigational candidate in a Phase III randomized controlled trial to improve both body weight and hyperphasia related behaviors in PWS patients. The ZAF-203 data highlights the potential of MetAP2 inhibition between induced substantial weight loss and improvements in glycemic control in patients with complicated obesity to a degree only seen routinely with surgical interventions. Taken together, the data highlight the power of beloranib and our MetAP2 inhibitor platform in addressing complex metabolic disorders. We look forward to sharing more results from the ZAF-311 and ZAF-203 clinical trials at upcoming scientific and medical conferences throughout the remainder of this year.

We would like to thank the many experts who have helped us to better understand the incidence of thrombosis in PWS patients and to develop a risk management strategy for beloranib in this population. With their insights and unique perspectives, we are arriving at what we believe is an appropriate strategy to support continued development of beloranib and we look forward to a meaningful discussion with the FDA.

While our focus remains on beloranib for PWS during this critical time for the Company, I do want to remind you that we have two additional candidates in development, ZGN-839 for NASH and our second-generation MetAP2 inhibitor for broad obesity indications. We also hope to advance beloranib into a Phase III trial for a second orphan indication for hypothalamic injury associated with obesity, or HIAO. We look forward to providing an update on those programs once we have reached a resolution with the FDA regarding the clinical hold for beloranib.

I will now turn the call over to Patty for reviews of the financials.

Thank you, Dennis, and good afternoon everyone. Today I will focus on full-year 2015 results, but the details for the fourth-quarter results are included in our press release.

Turning to Slide 17, for the year ended 2015, we reported a net loss of $74.3 million or $2.78 per share compared to a $36.5 million net loss or $3.00 per share for the year ended December 31, 2014. Just as a reminder, we completed our IPO in June 2014.

Our operating losses were primarily driven by research and development costs associated with our beloranib development program, including our best PWS, ZAF-311 Phase III clinical trial, and the ZAF-203 clinical trial in severe obesity complicated by type II diabetes, as well as costs associated with the ongoing development of ZGN-839 and our second-generation MetAP2 inhibitors. We also incurred increased personnel related costs as well as an increase in non-cash stock-based compensation expense during 2015 that totaled $8.6 million.

Moving to research and development expenses, for the year ended December 31, 2015, R&D expenses increased to $54.6 million from $27.4 million for the prior year. Included in 2015 were costs of approximately $30 million associated with the advancement of the Company's beloranib program, primarily clinical trial and CMC expenses related to the ZAF-311 and ZAF-203 clinical trials. Also included are expenses of $4.9 million associated with our ZGN-839 program and $5.8 million related to our second-generation MetAP2 inhibitors. We also had increased personnel related expenses totaling $6.1 million in 2015 as we hired 17 new employees in R&D. And finally, we also saw an increase in non-cash compensation expenses that totaled $2.9 million for 2015.

Moving onto general and administrative expenses, as we expected and previously communicated, G&A expenses for the year ended December 31, 2015 increased and were $19.2 million compared to $8.1 million in the year ended December 2014. The increase was primarily due to increased personnel related costs totaling $4.3 million in 2015 as we hired eight new employees in G&A. We also incurred increased public company costs, travel and other related costs as well as increased professional fees as we had been engaged in commercial readiness activities related to PWS during 2015. There was also a significant increase in non-cash stock compensation expenses during 2015 which totaled $5.7 million.

With respect to our cash position, as of December 31, 2015, we had cash, cash equivalents and marketable securities totaling $185.1 million, which exceeded our financial guidance to end 2015 with greater than $180 million in cash. We have a strong balance sheet and feel very comfortable that we will end 2016 with a cash position in excess of $100 million, but we will provide more specific financial guidance once we have better clarity on the path forward for beloranib. We expect that this cash position will be sufficient to fund our current operations well into calendar year 2017. We are financially well-positioned to execute on our strategy to work to lift the full clinical hold on beloranib and pursue our key programs in 2016.

With that, I will turn the call back over to Tom for closing comments.

Thank you Patty. Before we open the call for questions, I want to end my prepared remarks today by welcoming Dr. Tom Daniel to our Board of Directors. Tom's impressive experience in biomedical research and drug discovery and development, most recently with Celgene, will serve us well as we continue to advance beloranib in our earlier stage compounds. Dr. Daniel's leadership and experience gained in the development and registration of Revlimid and Pomalyst are particularly relevant to our efforts with beloranib in our second-generation program and we welcome his insights and counsel.

The past few months have been marked by a combination of challenges and clinical successes for Zafgen. While we take as seriously as ever the imbalance of thrombotic events observed in our studies, the powerful efficacy data from our two trials has reinforced our resolve to find a path forward for beloranib in PWS and other rare obesity indications. The reaction from the PWS community has been overwhelmingly positive, and we are grateful for the continued support of patients, their caregivers and the study sites who participated in our trials. We look forward to taking this data package to the FDA and to updating you on our progress in future calls.

We will now open the call for questions. Operator?

(Operator Instructions). Joseph Schwartz, Leerink Partners.

Hi everyone. Thanks for taking the question. This is Brett in for Joe. I'd like to see if you can share any more granularity about what the path forward would look like after completing and submitting this initial risk mitigation data package to the FDA specifically, whether even from the FDA at this point around the date at which you intend to make the submission and then furthermore what the next steps would be as far as interactions, discussion, adjustments, and entire timeline to when you expect to be able to possibly lift this complete hold.

Thank you. So, there's a lot in your question obviously, but, in short, we have not yet been able to provide guidance to when the meeting with the FDA will occur. We did have a conversation with them last month I suppose it was, and we have I would say a good agreement on what the nature of the content of our reconvert needs to be. We just got how we should be presenting our data in that briefing book, and how -- what we should contain within the briefing book. And so we are working on that now and I would say that we are closing in on the more final steps of having our plans together. Those plans we'll take back to our panel of experts, our group of experts, to pressure test once we've got it summarized. We will also take it to our board, and after that, we will go to FDA with the briefing book. So there's time involved in scheduling the meeting. There's time also involved in getting formal admitted summary of that meeting back from FDA, and that process will take a series of months in our expectation. And after that and only after that would we first of all come back to all of you with more clarity about what has gone on in the course of those conversations. But also at that point, we would be presumably prepared to move forward to formally request the hold be lifted providing that we are in agreement with a path forward for that.

So, I would just say watch the space. We are working as diligently as we can. We want to make sure that we go to FDA with the best possible package, one that is both rational and that is fact-based and that it is comprehensive. And so we are working very, very hard just to make sure that we do this correctly and in a way that really provides the right context to move forward. So I suppose that's the best way to answer your question.

Thank you. Yes, that's very helpful. And that guidance around the number of months after submission makes sense. Is that something that the FDA has specified, that there would be any additional sort of quiet period in there when they would then be working through this package, or at that point do things move together forward iteratively in your expectation?

It's just the normal course of the timing for meeting requests, the timing for getting meetings scheduled, the timing for getting minutes back and then turning things around. It's not anything beyond normal business.

Okay. And then one shorter question. I just wanted to make sure I heard correctly that we should not expect to hear any further updates on other clinical development programs until after a full resolution is reached regarding the clinical hold that is in place. Is that correct?

I would say once we feel that we have reached a level of clarity that we come back to, that's when it will happen. At the latest, it would be at around the time that we hear back on the hold. We might come back sooner than that, but it all depends on I would say the clarity that we get from the meeting that we'll hold with the FDA and the minutes that are the result of that meeting.

Okay, great. Thank you very much.

(Operator Instructions). Christopher James, FBR & Company.

Good afternoon. Thanks for taking the questions and congrats again on two nice sets of data. I guess given the significant impact you are seeing on behavior, hyperphasia, have you collected any data on choking risk in your studies? And I would assume that behavior related changes would have an impact on choking risk and perhaps gastric perforation. Will you collect that and present that to the FDA?

I'll let Dennis answer that.

That's not an endpoint we specifically gathered. Of course, if there were any choking events or gastric rupture, esophageal rupture, it would have been captured as part of the safety data collection. But we had none of those cases in our trial. And I think in order to look at that as a possible benefit of the drug, that something that's probably going to happen as a result of a much larger and longer duration observation, which we can probably do as a post-marketing commitment. It does make intuitive sense that, if you are improving hyperphasia related behavior, that these things should also go in the same direction. But until we see that concrete data, it's hard to say at this point.

Okay. That makes sense. And then as a follow-up to the previous question, can you discuss maybe the mechanics of getting off the clinical hold? Will you be placed on partial hold from full hold or will you just be off of clinical hold if you fulfill the requirements that the FDA has laid out?

I suppose that depends on the nature of how that conversation goes. But we will certainly be seeking to get off of hold completely, but, again, we need to understand how that conversation goes.

Okay. Thanks guys.

Corey Davis, Canaccord.

Thanks very much. I have a couple. The first is, and I think this has been asked before, but I'll ask it again, is why do you think you didn't see a dose response? I don't think either trial saw much of a dose difference. And corollary to that is do you think there's a chance to go to a lower dose than 1.8 milligrams of beloranib?

So, I think, if you look at the primary efficacy endpoints, I agree there doesn't appear to be much of a dose response. If we look at the data more carefully into some of the sub analysis or secondary efficacy endpoints, the dose responsivity does come through a little bit more depending on the endpoints you look at. But it's important to recognize that the study wasn't powered to show a difference in the doses. If we had a much larger patient population, perhaps that would have resulted in more of a difference between the two doses but, again, the study wasn't set up to display that.

Okay.

So I guess another way to say it is just because there is an absence of a dose response doesn't mean that at the confirmation there's no dose response because the study wasn't powered adequately.

Right. And I know this was kind of already asked, but once you do have an FDA meeting, can you outline what are the different types of outcomes that could come from that meeting? Is it maintaining a clinical hold, shutting down a program? Could it be a partial clinical hold pending more data, which seems unreasonable, or just a resumption of clinical activity?

Yes, I think all of those things are possible. Of course, we need to get through those conversations. We will be proposing a specific course of action to follow up on the data that we will be summarizing and our assessment of different paths that we could take moving forward. And so we would anticipate that we will get some feedback on the specifics of the proposals we'll be making. Hopefully during the course of the meeting, we will have a conversation about how we might align on things we might do moving forward.

I guess it's premature to say now whether there would be additional matters that we would need to take up or new studies we would need to run before we could get back in the clinic. But I will just emphasize that the focus of the clinical hold and our ability to get off of it is really around our ability to develop a plan to utilize the drug in a safe, in a reasonably safe and effective manner that mitigates risk to patients relevant to the benefits they'll receive. And so we will be going forward with a proposal that hopefully will provide good control of thrombotic risk while allowing us to further study the drug and test it for efficacy and for the rigor with which we can impose a mitigation strategy. These are fairly normal types of things that one sees at this stage of development. And so it's our hope and our expectation that the conversation and our path forward will be focused on implementation of that approach rather than on the need to address additional deficiencies. And at this point, we don't believe that there are such things.

So I think we will know a lot more, but the hope or let's say the most desired scenario is that we do have a good conversation with them that leads us to a path that we can pick up and run with, and that's what we will be seeking. I suppose, at some level, the negotiation or the conversation could get into the range where it simply is outside of the scope of what our program can handle. We hope and expect that will not be the case, but that would be something we would have to bring back to the Company to discuss. And it's also possible that there may be a need for additional types of studies that would make the timeline or the duration of that effort something we would need to consider. But again, all of these things will be taken into balance as we move along.

And I'd just like comment that -- because I think it's really relevant here -- that we are completely convinced that FDA understands the severity of Prader-Willi syndrome and that they are motivated to do the right thing in terms of bringing therapies forward for this population, providing it could be done in a way that is safe and that balances risk and benefit. So I think the totality of our data set, along with our plan forward, will hopefully lead us into an area where we can move forward confidently and that we will have a path forward that we can share with you. So that's a long-winded way of saying we will see it when we see it, but at the same time, just understand that we are very, very thoughtful in the approach that we are taking to the agency and we are hopeful that they will respond accordingly.

So is the primary thrust of your proposal to the FDA going to be around Prader-Willi and not around the diabetes indication?

Yes, that's right. I think, clearly, where we are today with the drug, particularly for beloranib, it certainly makes sense to go into this very, very high need population. If we were to go down the direction of developing the drug for diabetes, we know that this would require very long and very large clinical trials, and that the risk mitigation approach would need to be really focused on the sort of nature of the diabetes and obese population.

Now, so with regard to Prader-Willi syndrome, we feel that there is a very attractive opportunity there for our Company still with beloranib and we are delighted to be able to focus the program on that population while advancing our second generation compound into the obese and diabetes population in a way that maximizes the learning that we've had from beloranib.

That leads me to my last question, which was the cash burn for 2016, if I am reading the numbers and doing math correctly, which I've never been good at, it looks like you're going to be burning about $85 million. But without any major clinical programs going on, that sounds high. But with what you just said, can you do clinicals with the follow-on compounds, or is that burn mainly just related to kind of personnel expenses and dealing with getting the clinical hold lifted?

I'll let Patty answer that.

So your math is correct, except I would clarify that what we've said is our cash will be greater than $100 million at the end of 2016. We have a lot of uncertainty in our spend and the timing of clinical development particularly, which is a big part of our spend for 2016. So we will give additional guidance as the year progresses when we have a better idea for the timing and path forward for beloranib.

Right now, we do plan to have clinical expenses in 2016. Hopefully related to our beloranib program, we'd like to start to get back to our path forward for HIAO. And we do have a goal this year to progress our second generation compound into the clinic as well.

Sorry, so for the second generation compound, can you do that in the presence of a clinical hold on beloranib?

So, I mean bear in mind that the FDA's jurisdiction is in the United States. There are other places that one can study drugs. And also bear in mind that the initial trials or trials that we'll be running with our second generation compound will be very short duration, low-dose, small number of patients, relatively healthy people who are under very careful supervision. And so any risk that would be sort of incurred by that type of study would be accordingly reduced. So we don't see the two programs are necessarily inherently linked.

But what I will say beyond that is before we step into the clinic, we will have completed our own assessment of thrombotic potential of our second generation compound. We are doing a lot of work with all of our molecules right now in animals and in vitro type studies to really explore the full impact of the drug on multiple body systems.

And so we also -- I'll just point out that we have been working in this particular target area, this chemical class, now for 10 years. We know this extremely well. And although we need to sort of watch the space, we have a number of very clear-cut ideas about how to really maximize the safety window for our second generation compounds and we are hopeful that we will have a quite let's say remarkably separated sort of safety margin for our second generation compound relative to beloranib. Of course, that remains to be proven. We really want to make sure we bring those data to you in a forum like this so that everyone can see them. But we are feeling pretty good about it.

Thank you.

Jason Butler, JMP Securities.

This is Harry on for Jason. I just had one quick question. I was wondering if you could specify what are the kind of hypothetical potential strategies going forward for beloranib, assuming the worst case scenario where unfortunately it does increase the rate, it increases the rate of TEs and slightly the rate of TE-related mortality. Like for instance you've mentioned a few strategies such as identifying a subset of patients who are less thrombotic or concurrently administering prophylactic medication. Are there other potential kind of hypothetical strategies, if you could maybe lay them out, such as could you show that even if this drug increases TEs and TE mortality, maybe it's okay in PWS because of the improvement in hyperphasia and obesity? And if so, exactly kind of how that could be demonstrated in a hypothetical case?

Yes, there's a lot of hypotheticals in there, and we love those. But at the same time, it's sort of challenging to go through all of that in detail in a call like this. But the way I would put it is we are looking to take our first next step forward from where we are today. We will be, in all likelihood, beginning with a rather conservative approach that will allow us to get back on drug and to study patients, hopefully a large fraction of patients, in a way that really both dramatically and relevantly suppress the risk of these type of events from occurring. And so I think the first strategies that we'll approach and would be accepted for us to move forward would be things that would really clamp down on the likelihood of these events occurring. That would either be with a very rigorous monitoring approach or through prophylaxis, or directing patients who flag abnormal values to treatment for their thrombotic disease either with or without ongoing beloranib treatment. So those are three options. It's either going to take people who are extremely low risk and monitor them very carefully, and keep them on drug only if they remain at low risk. The middle ground is to take those same people and treat them for thrombosis if they run into a situation where they are beginning to throw abnormal values. And the most -- sort of the third of those is to prophylax and to move into treatment only after we can demonstrate that prophylaxis is on board and functioning. And so those are the sorts of three major options that we would point to today as being the more likely first steps for the drug to move forward. And it's hard to say. Again, watch the space and we will be back with you as soon as we have more clarity on what is acceptable in the minds of FDA and how we would go about validating that. So that's the work we are doing right now, and we look forward to being able to update you as soon as possible.

Great. Thanks.

Thank you. Ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the call back to Dr. Hughes for closing remarks.

Thank you. I'd like to thank everyone again for joining the conference call. In January and February, we've had the opportunity to report positive data from two important studies that highlight the potential of beloranib, and we are advancing our efforts to develop a risk mitigation strategy that could support a path forward for beloranib in PWS. We look forward to update you on our efforts in the coming months. Enjoy the rest of your day. Goodbye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone have a great day.