輝瑞 (PFE) 2008 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Icagen fourth quarter 2008 earnings conference call.

My name is Oeneka and I will be your operator for today.

At this time, all participants under a listen-only mode.

We will have a question-and-answer towards the end of this conference.

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

At this time, I would now like to turn the call over to Dr.

Richard Katz, the Executive Vice President and Chief Financial Officer.

Please proceed.

Thank you, operator.

Good morning, everyone, and thanks for joining us today to discuss Icagen's corporate research and clinical progress as well as our financial results for the fourth quarter and full year 2008.

With me here today both are Kay Wagoner, our CEO and Seth Hetherington, our SVP of Clinical and Regulatory Affairs.

Kay will start the call today with a general overview.

Seth will then go into more detail regarding our clinical programs, and then finally, I'll review our financial results and provide guidance for 2009.

Before we begin, I would just like to read the following brief statement regarding any forward-looking statements that we may make today.

Various remarks that we may make about the company's future expectations, plans and prospects constitutes forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from these forward-looking statements as a result of various factors including those discussed in the most recent quarterly report on Form 10-Q as filed with the SEC, and you should just be aware of that.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

And therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

So with that, let me turn the call over to Kay to provide a company overview.

Thanks, Rich.

My remarks this morning will be very brief because I would like to allow most of the time for Seth Hetherington to give you the details and results in our clinical programs.

As you may remember, in late 2008, we successfully completed our multiple ascending dose Phase I study and began a series of Phase II studies in our asthma program.

Senicapoc is the lead compound in the asthma program, and it is the first KCa 3.1 potassium channel inhibitor to enter clinical development for asthma and represents a real new approach to decreasing inflammation in this indication.

There are a number of potential advantages for Senicapoc.

I will list at least three of them this morning.

First, it has preclinical anti-inflammatory effects and thus would be proposed for chronic use to reduce inflammation in the airways, thus preventing or reducing the severity of asthma attacks.

Secondly, it's well tolerated in all doses that we tested with no dose limiting toxicity.

And thirdly, it should be easy to use, since it would be given orally once a day.

We are currently approaching completion of the enrollment phase of their first group of concept study in patients with allergic asthma and in a moment, Seth will describe the details of this ongoing study.

This week, as we announced this morning, we began dosing patients in our second Phase II study in asthma which is designed to investigate the effect of Senicapoc in preventing or relieving asthma symptoms in patients whose condition is exacerbated by exercise.

Many asthma sufferers have an increase in their symptoms upon exercise, and so this study will help to understand the generalizability of our KCa 3.1 blocker to a broad population of patients with asthma.

The benefit of a drug in decreasing asthma symptoms resulting from exercise is important and actually has become an approvable end point for asthma.

Both of these studies are cost effective ways to determine the value of this drug and if positive, will greatly increase the potential for a partnership opportunity and again, Seth will give you the details of that second study in a few minutes.

Briefly, let me turn to our KCNQ program, our program in epilepsy and pain..

The compound is called ICA-105665 and we're in Phase I with that compound.

We've studied cohorts of healthy volunteers and patients and to date, ICA-105665 has been very well tolerated with no dose limiting toxicity and therefore, no need thus far for titration.

If this lack of need for titration holds up as we get more experience in patients, this factor alone will help distinguish this compound in the market.

If the Phase I results are positive for 105665 and the FDA is supportive, we target the initiation of two proof of concept studies this year.

One of these proposed studies is in epilepsy patients who have seizure like EEG responses when they see repetitive flashes of lights, and the other is in healthy volunteers who are subjected to mild, painful stimuli.

Our goal is to obtain initial results from both of these studies this year.

Of importance last week, the FDA accepted our proposal to begin the healthy volunteer pain study and therefore, planning has escalated so we can begin that study as soon as possible.

Additionally, FDA requested that we submit the proof of concept for the review and approval.

Subject to that approval, we will initiate our epilepsy proof of concept protocol for their review and approval.

Subject to that approval, we will initiate the proof of concept study in epilepsy patients later this year as well.

Seth will give you the details of both of those studies in a few minutes.

Turning to the research efforts, our research programs are making substantial progress.

Over the years, this research team has generated millions of dollars of revenue from collaborators interested in our research platform.

Now we are targeting T-type calcium channels, sodium channels and trip-a 1 channels for pain and a calcium release activated calcium channel for inflammation.

As you know the sodium channel program is being conducted with our partner Pfizer, and that's going really well with a clinical candidate targeted for this year.

Either one of these research programs in pain or inflammation or one of our clinical programs is on target to form the basis for a new collaboration, which is a key focus for Icagen this year.

Let me also say that in addition to the value that we are creating through our clinical programs and our research platform, we are securing value for our shareholders through a number of measures that we're taking to conserve and also build cash in these unusual economic times.

By redesigning our clinical and research plans, by eliminating 2008 bonuses for all employees, by capping raises and salaries and other measures such as my -- decreasing my salary and the board decreasing its cash compensation, we have eliminated millions of dollars from our original budget for 2009.

These cost reduction measures and others under consideration, along with our focused effort on doing a meaningful deal this year are directed towards insuring that we have sufficient capital to drive the development of our program as well as sufficiently increase our runway.

So let me turn this over to Seth to give you an update on these clinical programs.

Thanks very much, Kay.

I'm going to start with an update of the Senicapoc asthma program.

As you know, last October we initiated a Phase II proof of concept clinical trial to evaluate the safety and efficacy of Senicapoc in patients with allergic asthma.

The basic premise here was that this is a novel inhibitor of KCa 3.1 potassium ion channels and would decrease inflammation and hyper responsiveness to an inhaled allergen challenge.

We have previously reported that Senicapoc reduced airway resistance, which is the hallmark of asthma in a preclinical model, so the objective of the current trial is to reproduce these observations or effects in a clinical setting.

This is a double blind placebo controlled parallel group study.

It enrolls patients with allergic asthma.

This is a subset of patients who have a decline in lung function when they inhale a measured dose of allergen such as house dust or grass pollen.

So using this allergen challenge, the magnitude of the fallen lung function is measured by a technique called spirometry that directly measures the flow of air or FEV 1, which is the amount of air that can be forcefully exhaled in one second.

Approximately 30 such patients from two clinical research centers in the United Kingdom are being randomized, one to one to receive either Senicapoc or placebo once a day for two weeks.

After the treatment period, the patients return to the clinic and their FEV 1 response to the inhaled allergen is measured again by spirometry.

The primary efficacy analysis is the comparison between Senicapoc and placebo and the change in FEV 1 that occurs several hours after the allergen challenge, or what is called the late asthmatic response.

We will also be studying the effects of Senicapoc on lung inflammation, measuring the fraction of exhaled nitric oxide and examining sputum samples for cytokines and eosinophil counts.

The study will be fully enrolled very soon, and the initial results will be available in the third quarter of this year.

In addition to this allergy challenge study, we've started a second Phase II proof of concept clinical trial in patients with exercise induced asthma.

This is similar to the study that I just described, but it is complimentary in what it may demonstrate about Senicapoc as a potential treatment for asthma.

It's a randomized, double blind, placebo controlled study of patients whose asthma is triggered by exercise.

The response to exercise was asthma symptoms and a decline in measured FEV 1 occurs among the majority of patients.

The mechanism by which exercise triggers asthma symptoms is somewhat controversial and may differ from that of the allergen challenge.

The ability of a drug to prevent or reduce the decline in FEV 1 with exercise would strongly support further study in a larger trial of chronic asthma.

So in the exercise challenge study, approximately 60 patients from approximately 15 clinical research centers in the United States will be randomized one to one to one of two treatment arms, Senicapoc or placebo.

They will take the drug once a day for four weeks, and we will measure the response in FEV 1 to a standardized exercise test before and after the treatment phase.

The primary efficacy analysis is the comparison between treatment arms and the percentage in FEV 1 following exercise.

We expect the top line results from this study later on this year.

Now, let's turn to the program for our drug ICA105665.

I will refer to this as simply 665, and this is a selective opener of KCNQ potassium channel subtypes.

Here we are studying two potential therapeutic indications, epilepsy and neuropathic pain.

In the nonclinical studies leading up to our clinical program, 665 had demonstrated broad spectrum activity in a wide range of seizure models, including models of treatment resistant seizures as well as activity in certain models of pain.

In the second quarter of 2008, we initiated a multiple ascending dose, Phase I trial of 665.

This trial was a study conducted with healthy volunteers to characterize the safety, tolerability and pharmacokinetics of the compound.

Three cohorts of subjects were studied at doses of 50, 100 and 200 milligrams administered orally twice daily for a period of seven days.

All the subjects tolerated 665 well at all three dose levels.

There was no subject who discontinued participation in the study, there were no dose limiting toxicities and no serious adverse events.

The pharmacokinetics were linear, dose proportional and consistent with the potential for twice daily dosing.

In order to evaluate safety, tolerability and pharmacokinetics in the treatment population, we have expanded this study to include patients with epilepsy.

Just as in the healthy volunteers, this first cohort of patients tolerated ICA665 well and no subject discontinued dosing.

There were no dose limiting toxicities and no serious side effects -- no serious adverse events.

Data collection is in progress for this cohort and the plasma samples for drug levels have yet to be analyzed.

We will be reporting the available results from this study at the 10th Annual Antiepileptic Drug Trials meetings to be held April 15 through 17 in Coral Gables, Florida.

In addition to the potential indication of treatment for epilepsy, we're planning to study 665 as a treatment for pain.

The first proof of concept trial will be a study conducted in healthy volunteers.

This will be accomplished with a standardized protocols in which the subjects are exposed to standardized mild painful stimuli and administered various doses of 665 or a placebo.

The objectives of the study are to demonstrate a range of doses that can reduce the sensation of pain and to find an appropriate dose range for study in subsequent clinical trials in patients with chronic pain, such as neuropathic pain.

We're still in the planning stage for this trial, but we will initiate the study as soon as possible with a goal to get the top line data by the end of the year.

The second study for 665 that we plan this year is a clinical trial utilizing a photosensitivity protocol.

This type of study enrolls patients who have epileptic form responses demonstrable on EEG to flashes of light, referred to as photic stimulation.

This approach has been used for drugs currently available for treatment of epilepsy and for drugs in development, and it's a very efficient way to establish doses for later stage Phase II studies.

The objective is to identify a range of doses that can suppress the evoked EEG responses using what is in essence a single blind crossover design.

Up to 12 patients may be enrolled at a limited number of specialized centers and once finalized, the protocol will be submitted to the FDA for review, provided the FDA agrees with our plan, we'll initiate the study with the first results expected around the end of the year.

Now I'm going to turn the call back over to Rich for the financial summary.

Thanks.

I'm going to focus today on the fourth quarter results and certainly, if there's question on the full year results, we can discuss that in the Q&A.

For the fourth quarter, revenues were $3 million, and this compared to $2.9 million in '07.

So a modest increase of 5%, and that was entirely due to the Pfizer collaboration revenue in both periods was from the Pfizer collaboration.

Operating expenses for the fourth quarter were $6.9 million, again, essentially unchanged from the same period in '07.

We had some increased expenses related to Senicapoc development for asthma and some legal expenses, but those were offset by decreased expenses in the development of 665 and some pharmacology studies, Senicapoc, the development for sickle cell and stock-based compensation.

Net loss for the fourth quarter was $3.9 million.

This was slightly wider than the net loss of $3.6 million in '07, but the difference was almost entirely due to lower interest rates.

We kept our cash in a very liquid short term treasuries and therefore have gotten lower yield than we have during the previous year.

Let me now turn to guidance.

Revenues for this year are expected to be in the range of about $8 million.

This includes recognition of approximately $4 million of deferred revenue in connection with our collaboration with Pfizer.

I would note with regard to the revenue guidance, this revenue guidance assumes that the research phase of the Pfizer collaboration concludes in August as originally scheduled and planned.

It is certainly possible that the research phase could continue beyond that period and if so, we will provide updated guidance at that time.

R&D expense is expected to be in the range of $18 million to $21 million, G&A $4 million to $5 million, and those factors would result in an operating loss expected in a range of $14 million to $16 million,(Sic-see press release) cash used in operations, approximately $16 million to $20 million.

One other thing to note is that this guidance does include the effect of stock based compensation, which we estimate at about $1.7 million during the course of '09.

That will conclude our prepared remarks, and we will be happy to entertain your questions.

(Operator instructions) The first question comes from Christopher James with Rodman and Renshaw.

Please proceed.

-- in your controlling of spending --

Chris, we missed first part of your question.

No, I didn't ask -- I just said congratulations.

Oh, okay.

Yes.

We want to hear that again.

(laughter)

So I guess you're probably constrained for legal reasons in what you could publicly speak about the situation with Xmark, but could you perhaps give us an update or describe your current level of interaction with them?

And I guess what could be expect communication wise going forward?

Let me address that, Chris.

I probably am a little bit more directly involved than Kay, and Kay, feel free to certainly add to what I might say.

Chris, I think that Xmark's expressed their views publicly through communications to us as well as through public filings, and I think that they have a set of views that may or may not reflect the views of the broader shareholder base.

We are certainly mindful of the concerns that they have expressed regarding levels of spending, the importance of forming collaborations, et cetera, and I could tell you our board is very focused and the management team is very focused on maximizing value for shareholders.

But there are differences of opinion at times about how to do that.

We have not chosen to publicly respond through press releases, et cetera.

Our feeling is that we are managing the company appropriately.

We are happy to address questions in a very open forum, as we are today.

Shareholders also know that they are free to call our offices at any time and receive updates and certainly, we welcome and encourage other shareholders to express their views.

But I think what we need to do, what we are continuing to do is manage the company as we see best, as the board sees best.

I think we are doing that.

I think you have heard a lot about our progress this morning.

We are going to continue to drive that forward.

So we take Xmark's criticisms quite seriously.

We obviously do not agree with all of them.

We do, though, certainly acknowledge that cost control is very important and that forming an additional collaboration or more than one collaboration are very important objectives.

So that's kind of the summary.

I hope that's helpful in answering your question.

No, that's very helpful, Rich.

I appreciate it.

On that, following up to that, where are you, with respect to partnering ICA665 and Senicapoc, can you describe the level of interest, perhaps number of parties and may even go as far to ask have you exchanged term sheets yet?

I can't get into too much detail, Chris, for reasons that relate to primarily -- in other words we don't want to compromise our positions, vis-a-vis the parties we are talking with.

But I think it's fair to say and I'm comfortable saying that we do have interests in both programs, that we are proceeding with discussions, and that our objective certainly is to form a collaboration on one or both of our clinical programs and we also, by the way, have interest in our research platform and our research programs.

So there's a lot of interest in what we are doing, and we're working towards forming another collaboration or more than one collaboration.

I don't want to put a time frame on that.

I think it's a little bit dangerous to do that, and you get into a slippery slope.

I can tell you, though that we are working aggressively in that area.

It's our number one objective.

I think that's it's apparent to everyone that the capital markets are not hospitable right now to companies broadly and then specifically as you look at biotech companies and smaller (inaudible) companies, that just cannot be viewed as a reliable source of capital as it may have been in the past.

So we are a loss making company today.

We anticipate being so for some time as we develop our products and therefore, it is absolutely essential that we focus on bringing collaboration across the finish line, and we are committed to making that happen.

But I can't specify a time frame, and I really shouldn't be more specific in terms of number of parties, et cetera.

I can tell you that we do have significant interest across the range of our programs.

Thanks.

That's really helpful.

And then finally, does the identification of the clinical candidate with Pfizer trigger some sort of milestone and should we expect this compound to be targeting a SCN9a?

The answer to the first part of the question is yes, the identification with clinical candidate certainly does trigger a milestone.

It is a modest milestone.

There's another milestone then when an IND would be filed and then successive stages of development beyond that.

And the milestones escalate significantly past the-- at each step, there's a significant escalation.

In terms of the target, we have said that SCN9a is a part of the Pfizer collaboration.

That's not surprising to anyone who might have read the nature paper that first talked about SCN9a, because there were a number of Pfizer scientists who were coauthors on that paper.

But, Chris, whether the first candidate is directed at that target or another target, remember, there are three sodium channel targets that are part of this.

It would be too early to say right now.

So it could be that target, but it could be one of the other two sodium channel targets that we are working on also.

Great.

Thanks and again, congratulations on your cost control measures this quarter.

Terrific.

Thanks for your questions, Chris.

(Operator instructions) Your next question comes from the line of Chris Richard with Merlin Nexus.

Please proceed.

Yes.

Hi.

This is actually Dominique Semon here.

Hi, Dominique.

How are you?

Hello, everyone.

Two quick -- First, quick question for Rich.

I'm sorry, I was distracted.

Could you please repeat the '09 guidance in terms of burn rate.

Was it $18 million you said?

Yes.

On a cash basis, cash used in operations is expected to be somewhere between $16 million and $20 million, so $18 million would be a fair estimate.

All right.

Good.

Thank you.

And question for Seth.

Seth, I'm really surprised -- I must be missing something here.

Now, in the allergen challenge, asthma trial in the UK, you said -- or I may have misunderstood that you -- the results will come out on the -- in the third quarter of '09.

So that trial started in October of '08, but it will be one year trial to those 30 patients for two weeks?

Why is it so slow?

That's pretty typical, and there are a couple of reasons for that.

We generally run this trial during the non-allergen season so that your patients don't get natural exposure to allergens.

So we generally run these trials between September and May.

We are actually ahead of what we targeted for completion of enrollment.

Furthermore, there's a two month safety follow up because of the long half-life for this drug.

So that follow-up starts when the last patient finishes dosing, which will probably be sometime around the end of this quarter, early next quarter.

Also, there are laboratory studies on markers of inflammation that get done at the end of the study.

So you put all of those activities together and you include things like data cleanup and analysis, et cetera, et cetera.

And it will take us until about the third quarter to get all of that information together.

Wow.

Okay, so --

Dominique, one other thing just to note, -- to add to what Seth said.

You recall, this is a very specialized type of study.

So we're conducting it in two centers in the United Kingdom, and there are only a handful of centers around the world that do this study.

So it's not like we have 10 or 12 sites enrolling patients.

And the other point is that there's only a certain amount of bandwidth each center can do.

You can only handle maybe one or two patients at the time.

You have to complete those patients before you enter some additional patients into the queue just because of the intensity of the protocol and the number of procedures that gets done for each patient.

But so that does not necessarily mean that at least in terms of primarily end point FEV 1, that you will get the top line results in the third quarter.

I mean, the data will accrue as the study unfolds, right?

That's right, but there's a lot of data that fits together.

Whatever we see on the pulmonary function test, we want to correlate that with markers of inflammation.

If we want to take the time to properly assemble all the data, make sure we know what the total picture is before we release those results.

And clearly it is a blinded study.

So even though the results are evolving, it's a blinded study, so we won't know the answers until we unblind at the end of the washout period, and the data collection.

Oh, okay.

Dominique, if I could add one more piece of color, and Seth, feel free to interject as well.

I think that when we say third quarter, I don't think we are thinking September.

I think we are thinking a bit earlier in the third quarter than that.

Is that fair?

It could be.

And as you know, a lot of this depends on the process for data cleanup and collection of the final information and analyzing the data.

And also getting laboratory results back from specialized laboratories that run the markers of inflammation assays.

Okay.

And finally, how does then that fit with the partnering discussions?

I'm surprised that you said -- I think you is said, Rich, that there's already identified interest for the Senicapoc asthma program, which is good.

Obviously, we welcome that news.

But how could that be the case if the data is still blinded and unavailable?

Well, many of the companies that have expressed interest in Senicapoc have said that they are interested, but they would like to see the data from this study before moving further.

But there are other companies that have been interested in the program and have not expressed that they need to wait until we have that data available.

So I think it's safe to say that if the data is positive and we receive it in the type of time frame in the third quarter that we are talking about, that the level of interest, the number of interested parties will increase significantly but even without that data, we have had, as I mentioned, interested parties.

Okay.

But it's -- it would be logical to it think that a partnership would come in the second half of '09 then?

Oh, yes.

Certainly.

I don't think that it would be reasonable to expect -- given where we are in the discussions today, a partnership would be in the latter part of the year.

We're not talking the next couple of months having something signed, certainly, yes.

Okay.

And lastly, the exercise induced asthma trial, is that -- I'm surprised you start that before the results of the other one.

On the other hand, it's probably, from a time perspective, a good thing.

Is that driven by partner interest?

It's certainly driven partly by partner interest.

As we described the study, it represents a broader patient population from the standpoint of asthma in general and provides useful information for going into a larger chronic asthma study.

So it really will increase the value substantially too in a partnership that we might strike.

And that study actually can be done more quickly than the first study, because we can use multiple sites.

We are planning approximately 15 in the US, in fact, enrolled much more quickly, even though it's twice as many patients involved.

So the studies, both of them are very cost effective studies, and the values that they create for a potential partnership is tremendous.

So we believed that this was an appropriate step to do if we could do it cost effectively, which we have found a way to do.

So, your question is a good one.

But I think the package together, it makes a lot of sense to a lot of folks that we have talked to.

Okay.

All right.

Thank you very much.

At this time, there are no additional questions.

I would now like to -- I do have an additional question, sir.

Your next question coming is a follow-up from the line of Chris Richard with Merlin Nexus.

Please proceed.

Hello.

This is Chris Richard.

Follow-up question from a comment by Seth.

So in the 665 epilepsy study, you dosed a number of patients to 200 milligrams, and you mentioned there's no adverse events.

You went straight away at 200 mgs with that patient cohort?

There was no need to titrate these patients?

Let me just correct you a little bit.

There are adverse events.

There are mild adverse events related to the drug that we expected.

There were no serious adverse events and there was no dose limiting toxicity.

Because the events are mild, because there were no drop outs, because of adverse events or any lack of tolerance, at that dose or lower doses, we could conceivably view this drug as not requiring a dose titration.

You are aware that many of the anti-epileptic drugs start with a low dose and over the course of several weeks, build up to the final therapeutic dose.

We may not need to do that because the tolerance of this drug.

Now, that really depends on demonstrating efficacy of the doses we've currently studied and studying this drug in a larger population of patients.

But for now, that's the current profile of the drug.

Okay, great.

Thank you, Seth.

Your next question comes from the line of Keith Markey with Griffin Securities.

Please proceed.

Good morning, Kay and Richard and Seth.

Thank you for taking my call.

I was wondering if you might be able to elaborate a little bit about your research program that's at preclinical stage?

Perhaps just give us a sense as to some of the potential indications that you might pursue.

Yes.

As I mentioned, there are three targets that we are internally focusing on for pain, T-type calcium channels and trip A1 channels.

Their sodium channel collaboration, as you know, is with Pfizer, but the T-type and the trip A1 program are for pain.

So those are the indications.

We have got some really interesting compounds there, some interesting results.

It is preclinical as we said, and there's a lot of interest in those targets.

The T-type calcium channel program is primarily more in line with chronic serious neuropathic pain, it's a trip A1 program, maybe more of an inflammatory pain situation.

As you may know, that they are a number of inflammatory substance that is released to the site of inflammation that triggers trip A1 to open and when it opens, it is a part of a gating mechanism that transmits the signal of a painful sensation to the brain.

So it's sitting right in a nice situation of where it picks up those inflammatory substances.

Activate calcium comes into the cells and then the signal is sent to the brain that something is happening that's painful.

So we view that as a really nice focus effort there.

The calcium release activated calcium channels also called CRAC or ICRAC for the current, and that's a target that's really interesting.

It's been an area of interest throughout the industry for some time.

It flagged for a while -- or lagged for a while, because it was not clear what the subunits that make up the channel were, and that over the course of the last few years has become clearer that this interesting channel is made up of a couple of different components that come together to make it functioning.

It's the channel that we have worked on for some time and we have some really interesting findings with compounds that block this channel, reducing, say, the secretion of IL2, reducing proliferation in immune system cells.

It's also a channel that was of interest recently in a deal that Senta -- is that right?

Senta did with Roche.

And so the industry -- a large pharmaceutical industry, we know is very interested in this approach as well.

It certainly compliments our approach on the clinical side, where we are looking at potassium channels that modulates calcium in immune cells and this is a unique pathway also that allows calcium to come into the cell.

So inflammation and pain are the indications and those are the targets.

Thank you very much.

Your next question comes from the fine of Mark Monane with Needham.

Please proceed.

Good morning, and thanks for taking my question.

In regards to the asthma trial that was recently announced, can you talk about the advantages of using an oral medication versus an inhaled medication?

Maybe you can talk about some strategies around that.

And then, there's certain diseases that are not primarily inflammatory based, but seem to have a reactive component to it, like COPD or maybe even interstitial pulmonary fibrosis.

Can you talk about the potential in those indications as well?

Let me take them in reverse order, because that latter question I think is pretty simple.

Any exploration into COPD or IPF would be further down the line.

I suppose if you wanted to hypothesize, you could look at the fact that the KCa 3.1 channel has been implicated in smooth muscle proliferation and cellular proliferation as well as T and lymphocyte activation and one could think that over the long course of treatment, there would be some amelioration of remodeling that occurs in some of those disease processes, but here we are getting pretty speculative.

So it's an interesting thought.

It's one that would come out later down the line and something we have actually done something about.

Your initial question -- your first question again, repeat, was --?

The philosophy of the oral versus an inhaled product.

-- oral.

Sure.

If you just take a look at surveys of patients, 70% of patients who are currently on therapies for asthma say they would take something different if it were available.

Inhaled medications such as inhaled corticosteroids or long acting beta-agonists are really the foundation for treatment of asthma today, but they are difficult to use, particularly in younger patients.

Oral medications have an inherent appeal to them, particularly if it's a once a day dosing.

So I think there would be a lot of market acceptance.

What we hear back from our expert consultants are the advantages of this drug.

One of the advantages of this drug could be that it is orally delivered in a once a day -- and potentially, even a once weekly dose regimen.

So people do find this attractive as a consequence.

The other attribute of this drug that people are intrigued with is that it is a novel mechanism of action.

It primarily is what we believe to be anti-inflammatory, and hence, a lot of the studies in the allergen challenge of protocol look at markers of inflammation.

But the fact that it potentially is directed against one of the primary processes in asthma is very intriguing to people and should it play out that this is effective in asthma and is anti-inflammatory, it could potentially provide benefit not just to patients in the more mild categories of asthma, but for patients that are currently taking oral corticosteroids which is sort of the ultimate canon that one uses in the severe asthmatic, but a therapeutic regimen that people want to move away from because of systemic side effects.

Thank you very much for the added information.

Absolutely, Mark.

At this time, there are no additional questions.

I would now like to turn the call back over to Dr.

Richard Katz for closing remarks.

Sure.

We'd just like to thank everyone for joining us today, and we'll look forward to keeping you updated on our progress on our call next quarter.

Thanks again.

Thank you for your participation, ladies and gentlemen.

This concludes the presentation.

You may now disconnect.

Thank you and have a good day.