Sarepta Therapeutics Inc (SRPT) 2008 Q4 法說會逐字稿

Good day and welcome to the AVI BioPharma fourth quarter and year end 2008 fiscal results conference call. (Operator Instructions) Following management's prepared remarks, we'll hold a Q&A session. As a reminder, this conference is being recorded and will be available for replay, both by phone, shortly after this call and on the Company's Website beginning tomorrow, March 11, 2009.

I would now like to turn the conference over to Julie Rathbun in Investor Relations at AVI. Please go ahead.

Thank you for participating in today's call. Earlier this morning, we released our financial results for the fourth quarter and year ended of 2008. The press release with some of this detail is available on our Website at www.avibio.com and a 10-K will be posted within 24 hours. If you would like to be placed on AVI's press release distribution list, please e-mail me directly at investorrelations@avibio.com. Joining me this morning from AVI BioPharma are Dr. Leslie Hudson, President and CEO; David Boyle, Chief Financial Officer; and Dr. Steven Shrewsbury, Chief Medical Officer.

Before we begin, I'd like to remind you comments made by management during this conference call will include forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve material risks and uncertainties. For a discussion of risk factors, I'd encourage you to review the AVI BioPharma annual report on Form 10-K and subsequent reports, as filed with the SEC.

Furthermore, the contents of this call contains time sensitive information that is accurate only as of the date of the live broadcast, today, March 10, 2009. The Company undertakes no obligation to revise or update any statements to reflect events or circumstances after this conference call. I should now like to turn the call over to the CEO, Les Hudson. Les?

Thanks, Julie, and good morning to all of you and thank you for joining us. I would like to start by briefly touching on some of the transformations that's taken place in AVI over the last 12 months, which has moved the Company from an antisense pioneer to one of the leading RNA-based drug companies. Once Dave Boyle, our CFO, has discussed the fourth quarter and the year-end financial results, I shall then review some of the key 2009 milestones, with our deliverables for the management team. And then our CMO, Steve Shrewsbury, Dave Boyle and I will be available to answer your questions. We've had a chance on several conference calls to discuss many of the highlights from the year just gone. And so, I will touch on them only briefly. But from the point of view of the Company, it really looks quite impressive, the way we've been able to take this antisense pioneer and really pull it into a situation where it had some very real opportunities in 2009 and beyond.

The leadership team has had a real impact in bringing forward a series of new appointments where one has the benefit, both of experienced talent and importantly, a track record of success. This has in fact lead to new appointments in the leadership of discovery research, clinical operations, medical affairs, finance and also biodefense. Importantly, it's been combined also with the Company's memory in the sense of the leadership that was already in place for strategic alliances and also for chemistry.

Many of you will know that in terms of our key pipeline projects, for example, the DMD program, AVI had reported already this year, in 2009, on a successful investigator lead IM trial, which was completed at the end of last year with our collaborators from the Medex Consortium in London, lead by Professor Francesco Muntoni. We also, at the same time, announced the start of the AVI sponsored IV trial, for which our first patient was dosed last month. That patient has now gone through three rounds of dosing.

In the Ebola, Marburg, Junin and Dengue area, this is our biodefense projects, AVI-6002 and AVI-6003 have been advanced through the decision of the FDA to give safe to proceed clearance for the IND's for those two drugs. And so basically, they are being readied for Phase I safety trials in man. Interestingly, these programs or rather AVI's role in these programs, have also made it to the TMTI Department of Defense Website. And so, you can guess that these actually, as they're the first IND's that the TMTI program got, they're actually figured with some degree of prominence. And there's some other parts of this, which David Boyle will in here, update you on, particularly in terms of the public solicitation for such drugs as the Ebola, Marburg, RNA-based therapeutics.

We presented at the priority review voucher policy meeting, which was held in the FDA, where we argued last December for the inclusion of Marburg and Ebola under really the same set of parameters that actually allowed Dengue to be named in the legislation. We believe this is important, if our drugs, which are primarily intended for biodefense purposes, ever get developed for human therapeutics. I'm sure many of you have been tracking the human infections with Ebola in Angola and Congo that happened over the holiday period. As well as, in fact, the first report of an important clinical case of Marburg in the US. So the civilian and bioterror need is very real but the PRV, I think, is important because it effectively will engender more interest and therefore development of these drugs for civilian purposes.

Cook, our partner for cardiovascular restenosis, announced that they actually have started a trial looking at a third generation drug-eluting stent last year. This is the first use of an RNA therapeutic agent, in this case AVI-5126, which is against the transcription factor C-MYC. We did a raise of $16.5 million in terms of gross proceeds. And this was a registered direct offering to a select group of institutional investors.

I think overall, our technology is gaining acceptance as RNA-based therapeutics is gaining recognition by the industry. Particularly, in the area of alternative splicing, which actually from the Isis presentation featured really quite significantly at the J.P. Morgan Conference at the beginning of this year. I think there's a real impetus towards recognizing just the importance of that. Really underlined by the publications that have come out in the scientific literature. For example, at the end of last year in "Nature", there were two papers showing that almost 90% of all human genes undergo alternative splicing. Making this process,not just fundamentally important to biology but a highly likely contributor when it goes wrong or gets away from control, a highly likely contributor to many human diseases.

The financing environment is certainly challenging. Indeed I think it's the worst I've ever seen it in my career. Yet, AVI has been actually able to secure a capital raise, which will allow us to advance our important milestones over the next couple of years. Many biotechs are actually struggling. But though still, everybody is going to face tough challenges, we believe that AVI has a runway to deliver some important milestones. I'm sure we can actually have a discussion around that and Dave will touch on it.

In terms of the shareholder support, I think it's been important, not only did we bring in a new shareholder, Eastbourne, with the capital raise. But in fact, we've had now an effort to really get the feedback and questions from our shareholders and understand their concerns. We recognize the primary responsibility to assess the financial environment and keep in mind what needs to be achieved in order to continue advancing our programs and ensure the long term viability of the organization. We believe this will ultimately lead to strong value as an opportunity, both for the Company and in turn for its shareholders. Now, I'd like to turn the call over to Dave Boyle, to provide you with an overview of our financial results. And then I'll come back and we can talk about upcoming milestones.

David? Thanks, Les. Earlier this morning, AVI issued our press release highlighting our fourth quarter and 2008 full year financial results. Our report on Form 10-K will be filed with the SEC and available later today. As we've reported in the release, revenues for the 2008 fourth quarter were $5.5 million, up from $5.2 million in the prior year. Revenues for the year ended December 31, 2008, were $21.3 million, up from $11 million for the 2007 year. These increases reflect primarily the increase in research contract revenues of $0.3 million and $10.3 million respectively. Revenues in 2008 are derived primarily from AVI's government funded research contracts. We expect revenues from our current government contracts to continue through the first half of 2009.

As part of our business, we continue to seek opportunities for future awards of a similar nature to move forward development of these important projects, including treatments for the Ebola and Marburg viruses. From our recent discussions, we understand that additional bridge funding of approximately $10 million has been approved and set aside for additional development work for these therapeutic candidates in the near term. We hope to receive a significant portion of these funds.

Further, we believe that our programs fit a recent solicitation from the government for therapeutics to treat Ebola and Marburg that can be seen on the Federal Business Opportunities Website. If the Company is successful in its bid for the recent solicitation, this may provide substantial additional funding for these therapeutic candidates for advanced development through to NDA.

The net loss for the fourth quarter of 2008 was $1.1 million or $0.01 per share, compared with a net loss for the fourth quarter of 2007 or $4.1 million or $0.07 per share. For the year ended December 31, 2008, we reported a net loss of $23.9 million or $0.34 per share, compared with a net loss for 2007 of $27.2 million or $0.50 per share. Research and development expenses for the fourth quarter of 2008 decreased to $5.4 million, from $9.4 million during the fourth quarter of 2007. The decrease in R&D expenses was due primarily to decreases in manufacturing costs.

R&D expenses for the 2008 year decreased to $29 million, from $34.8 million in the prior year. This decrease was due primarily to decreases in contracting costs and a decrease in government research contract expenses, partially offset by increases in net clinical expenses, compensation costs and contracted external staff costs. During 2008, the Company completed the acquisition of Ercole Biotechnology Inc. resulting in additional expenses of $9.9 million relating to acquired in process R&D.

General and administrative expenses for the fourth quarter of 2008 increased to $2.9 million from $1.5 million for the fourth quarter of 2007. The increase in G&A expenses was due primarily to an impairment charge of $800,000 for a property held by the Company and an increase in compensation costs, including severance for a former Company officer who resigned during the fourth quarter. G&A expenses for the year ended December 31, 2008, increased to $9.8 million from $9.3 million in the prior year. The increase in G&A expenses for the year, was due primarily to the same $800,000 impairment charge, offset by a decrease in compensation cost. This decrease in compensation reflects the year 2007 expenses related to the separation and release agreement with the Company's former Chief Executive Officer.

AVI had cash, cash equivalents and short term securities of $11.5 million as of December 31, 2008, a decrease of $13.6 million from December 31, 2007. This decrease was due primarily to $12.3 million used in operations and $1.2 million used for the purchases of property and equipment and patent related costs.

As you will see later today in the Form 10-K, cash used in operating activities for the year ending December 31, 2008, is $12.3 million or approximately 50% of the $24.7 million used the prior year. This positive trend is primarily due to increased revenues and tighter fiscal control on expenses. Management continues to seek non-dilutive sources of cash through government and foundation funding of our product development projects, as well as through collaborative agreements.

For 2009, we expect our expenditures for operations, net of government funding, including our collaborative efforts, to be approximately $10 million to $12 million. The Company believes it will be awarded additional government funds to pursue the continued development of its antiviral compounds and has assumed certain revenues from these awards in providing this guidance. Should the Company not receive the additional awards or should the timing be delayed, it may have a significant negative impact on these expectations. Other factors could also effect our expectations.

As you know, in February of 2009 -- actually, end of January, we completed an equity financing, raising an additional $15.5 million, net of expenses. Together, with the cash on hand at year-end, we believe this gives the Company the ability to run its operations for at least the next year. As part of its decision to undertake this equity financing, management has considered several factors including; timing to significant milestone events; rates of predicted cash burn under several scenarios; the general state of the financial markets; uncertainties around availability, timing and amounts of potential future government contracts; and uncertainties relating to the establishment, timing and terms of potential collaborations for development of our product candidate.

I've just noted the 2008 ending cash number and our net burn for 2008 and projection for 2009, so you can understand that pre-raise, the Company had roughly one year of cash. In addition to the factors just noted, we believe that a dwindling cash situation in the second half of 2009 would likely have a significantly negative impact on potential collaboration discussions, government awards and the Company's ability to achieve important upcoming product development milestones. We believe having obtained this capital will ultimately be in the best interest of all of the Company's shareholders. And with these comments, I'd like to turn the call back to Les.

Thanks, Dave. So let's look at some of the 2009 milestones, which we believe the Company will be able to deliver. First of all, on restenosis, as you know, the primary duty for updating this information lies with Cook Medical itself, which is a private company. The update, that in fact, they very kindly gave from our analyst call and also our analyst breakfast that we held last year; essentially was to indicate that the restenosis trial would start in tertiary care centers and then expand to primary care centers. It's on course for data in the fourth quarter of this year, as already communicated. Ebola, Marburg and Junin, our biodefense area, as Dave was talking about, the public solicitation, which is out on the Department of Defense Website, the TMTI Website. Effectively, there's a public solicitation ending in April this year.

David referred to the bridge funding, which basically allows us to respond both to FDA requirements, also to complete an efficacy titration in animals. We take this as a very positive event. Major contracts though for work through to NDA and stockpiling opportunities are clearly where the Company's priorities are. And we actually are looking forward with some hope and belief that, in fact, we have an opportunity there of really being able to advance the Company's case with the Department of Defense, such that we actually are able to negotiate and award contracts for the Ebola, Marburg, Junin area. We have interest in these contracts but we're not expecting noteworthy events probably before late summer this year.

The new PMO+ chemistry, which has actually come from the Ebola Marburg program, will actually be applied to our previous program in HCV. You remember the problem there was that we were not able to achieve potency because of the problem of viral mutation. We had to actually go with a site where the RNA-based therapeutics was actually less potent. So we have an intent now to go back and apply AVI-7062, specifically, to the site, which we believe is, although it's prone to mutation, it should actually allow us to achieve greater potency. So our scientists believe that, in fact, that is a very very focused opportunity that we should actually look at. And if it's successful, we see this as an early preclinical partnering opportunity.

In terms of DMD, we have a new development candidate, AVI-5038, which entered preclinical development earlier this year. And it's, in fact, expected by the end of the fourth quarter this year to be beginning primate GLP talks. In other words, we have a potential for an IND some time in the second quarter of 2010. This work, as many of you will remember, is actually supported in part by Charlie's Fund.

In the UK, the exon 51 skipping drug, AVI-4658, we're expecting to be within touch with the predicted therapeutic range by about the third quarter this year. Remember, that is predicted from the experience that we've had in mouse preclinical models. But we believe that somewhere around two to four milligrams per kilogram, we stand some opportunity of actually seeing a dystrophin expression induced by drug treatment.

Let me remind you also though, that it's our intent that if we see no dose limiting toxicities, we believe that in fact dystrophin expression is probably something we would like to try and push up even higher. And so, Steve Shrewsbury will actually go on briefly a discussion around how we intend to modify that particular trial. That trial in the UK has been very much enabled by both our clinical collaborators but actually most recently also by our work with the Action Duchenne Foundation in the United Kingdom. Who have really been quite a significant force in Europe in being able to actually advance the case for effective therapy for DMD.

So AVI, I hope you can now see the beginnings of what we believe will be a franchise-based Company, where basically the evolution of product discovery is occurring, particularly for DMD and other genetic diseases, in a very concerted way. I think AVI today offers a strong foundation on which to continue and grow. Become an established leader, as both an innovator, partner and developer of RNA-based therapeutics. And really, we believe that the validation of our technology approach as we bring these drugs further into the clinic and the proof of concept is established, will allow us in fact to not only take benefit from advances in the clinic but also establish strong partnerships. And with that, I'd like to turn the call over to Andrea, our operator. And we'll start the Q&A session, please.

Absolutely, thank you. (Operator Instructions). We'll take our first question from Yale Jen with Maxim Group.

Good morning.

Good morning, Yale.

Thanks for taking the question. I have just a few. Just let me start with the first for the AVI-658 IV patient recruitment. Could you give us some update on the current status and any details on that?

Absolutely. So, what I'll do actually, I'll ask Steve Shrewsbury, our new Chief Medical Officer to actually answer that question. I should warn you, he and I have the same funny accent, so when I talk, I'll say it's Les. When it's him, it's Steve. Please, Steve.

Welcome, Steve.

Thank you and good morning, everyone. Thank you, Les. Yes, we successfully dosed the first child starting in February. That child has now been through three intravenous sessions. Last week, we had a review meeting and we are now pushing ahead with further dosing in the initial cohort. The next few, next three children, in fact, will be reviewed after they have gone through further three doses. And we will then be escalating to the next cohort. We're an track. The site at Professor Muntoni's establishment in the UK has a number of other patients ready to go. And we are anticipating, as soon as we get safety from earlier cohorts, being able to proceed up the cohorts.

Okay. So according to this schedule, would you anticipate the top line data will be available, say, mid year or early part of the third quarter or what's the timeline do you think it could be?

Well, we continue to be on track. We will hopefully, be in the third cohort by third quarter this year. And that will be providing safety information and we will then look at whether we need to escalate or whether we should escalate to higher doses at that point.

Okay. So that's a possibility but possibly -- most likely, before the end of this year, we will have some top line information available?

As I say, we will certainly have the safety information and we certainly hope, by the end of the year, to start producing some other information as well, some of the efficacy data.

Okay, great, thanks for that. And the next question is about HCV program. I'm sorry, let me just backtrack a little bit. In terms of the US development at this moment for DMD, any updates for that?

So, we were in a situation, as you know, we have a clinical hold on the IND that we submitted.

Right.

And we're in a situation now, as a Company, where we clearly having seen success in the UK with the IM trial, now really looking to have that clinical hold released. So, I'll let Steve briefly touch on that.

So we are back in dialogue with the FDA and we hope when we present them with some of the preclinical data, as well as some of the safety data from the recently completed IM study and some preliminary safety data from the ongoing IV study, that we will be able to start some studies or at least a study in the US. And in fact last week, I was meeting with some potential investigators. There is significant enthusiasm in the US. And we are revising a protocol plan, so that we can go ahead and talk to the FDA about that as soon as they feel it's appropriate.

Okay, great. Thanks. And in terms of the HCV program, any other updates in terms of a possible timeline for that to occur in this year?

Well, so, we are expecting to conduct only the early discovery research part of this program. As I indicated, we have a particular target site in mind, in terms of the virus. And so, the drug that we're actually testing, AVI-7062 really is a very specific opportunity, which will actually test the ability of the PMO+ chemistry to be able to address the site, which the previous HCV program that we had was enabled to. You remember that was a site where we had a high potency drug. But at the same time, when in fact we tried to test it, we saw that it was subject to viral mutation. And so pretty quickly, the drug lost its potency. And so, we have a very specific hypothesis. It's probably 12 to 18 months work, I would imagine. It's not a long drawn out program and we believe it will be highly partnerable in that stage and that would be our intent.

So, that will put some time in 2010, that's a possibility for completing the data or would that be a right time frame?

To know whether or not indeed our hypothesis was correct, exactly.

Okay. And lastly, a little bit of housekeeping questions in terms of the biodefense program. You mentioned the bridge fund for the $10 million. First of all, was AVI expect to receive a majority -- hope to receive a majority of that? And also, how long this fund will last? In other words, in the quarterly basis or what was sort of anticipated in terms of the funding?

We would expect to receive basically all of that funding and we would expect it to last probably for about another nine to 12 months. And there are actually two substantial chunks of that. One related to the dose titration studies for Ebola and Marburg and another chunk related to Junin. And of course, the Ebola, Marburg moneys would be spent earlier on. And Junin would go for the longer period of time.

Okay. And you said that, I believe, the Company already began being rewarded for the funds. So would these have kicked in let's say second quarter of this year or was that a reasonable assumption?

We think that's a reasonable expectation. The funds are actually in the contracting process currently.

And for the bigger prize, which is the Defense Department funding and are you guys anticipating this process will last to the next second half of this year and ultimately, the decision being made at that time?

Our expectation is that a decision would be made some time in the second half of the year. We hope it's mid to late Summer. Again, in working with the government for such a significantly large opportunity, it's sometimes difficult to predict the exact timing.

Okay, great. Thanks a lot and congratulations for the good year.

Thanks, Yale.

We'll take our next question from Reni Benjamin with Rodman.

Hi, good morning and let me add my congratulations as well and thanks for taking the questions.

Thanks, Reni.

So very quickly, maybe we can start off with the muscular dystrophy program. AVI-4658, can you give us an idea as to when we might see the full data set, either in publication or presentation form? And also quite a bit of top line data has been provided but is there something in the final data that we should be honing in on that you think is of importance?

You're referring to the intramuscular trial?

Correct.

Yes, so, we're actually now, at the point of putting together the final parts of the manuscript. This, as you know, was an investigator sponsored trial. Professor Muntoni took the lead in that regard. And clearly, the Company has been in very close discussions with him and the group. I think the major thing that we were expecting, that the manuscript will add, which is something I really would like to talk about and eventually, we will when it gets published. Is really looking at the amount of dystrophin induced per fiber. So you know there are two measures that are important that people tend to use in looking at how drugs, in this case for dystrophin expression, how you get induction. The first is the percentage of positive fibers. And to the extent we could, I think Professor Muntoni's comments, that were quoted in the press release in particular, show the response was very robust. And it would have been very surprising had it been anything less than what, for example, had been seen by previous studies done by Prosensa in this field. I think significantly, we've brought some great rigor in terms of looking at the amount of dystrophin per fiber and also where that dystrophin is actually found. One of the important things is, with monoclonal antibodies, you can distinguish between dystrophin, for example, that is just made but is not functional and essentially lies around inside the cell. Versus dystrophin, which is functionally coupled to the [dystrodrican] complex, which basically is probably prima facie evidence that it might be functionally coupled. And therefore, if you like, useful dystrophin.

Great. Just moving on to the IV study, I know that we just got a little bit of an update in that the first child was dosed and was given three intravenous dosings. Can you just remind us of the protocol here? How many more dosings might they get and then what do you need to see before you can progress to the next cohort?

Yes. This is Steve. The current protocol allows for four doses in the four cohorts, the lowest dose is 0.5 milligrams per kilogram. And then it goes to 1 milligram per kilogram, 2 milligrams per kilogram and 4 milligrams per kilogram, as the top dose. In each cohort, the first child will be given three weekly injections. And then, there will be a decision to increase the size of that cohort. After the full cohort has been opened and the last child has been dosed for three weeks, there will be a decision to increase to the next cohort. So basically, it's three and six weeks. And each child will receive 12 weekly injections. And after they have had the full 12 courses, there will be a period of two weeks before they then have a muscle biopsy, which will ultimately provide some of the efficacy data, very similar to what Les has just described.

And so, do you have to wait for efficacy data before you progress to the next dose or is it a safety read and then you move on?

No. The efficacy data will be provided 14 weeks after dosing has started. Dose escalation or cohort expansion will occur three weeks after dosing has started. So the safety of the first three weeks of dosing will allow us to make a decision to either increase the cohort size or escalate to the next cohort. It's significantly before we will then get subsequent efficacy data.

Okay, great. Okay. And just talking a little bit about the US regulatory path. You mentioned that, clearly with the data that's being produced in the UK and what has been produced in the UK, that you think the dialogue should improve. Could you give us some color around what it is that the FDA is not as well educated about or what's holding them back right now?

Well, I don't think it's a question of not being well educated. But historically, the regulatory authorities sometimes have a slightly different focus. And I think as Les has mentioned, I think the patient advocacy groups in the UK have had a very good relationship with the UK authorities. And the UK authorities were inclined to allow Professor Muntoni to proceed without perhaps the usual amount of preceding safety data that historically the FDA have preferred to see. And we are now preparing to provide them with that. And of course, we will also be in a fortunate position of being able to provide them with some clinical data in children, which of course will be even more helpful to them in our subsequent discussions. So we are moving forward, as rapidly as we can, to provide them with both those chunks of information, the preclinical and the clinical data and we look forward to that for getting into the clinic in the near future in the US and proceeding at pace after that.

Just a little codicil, if I may. Just in terms of the safety data, clearly, the UK authorities are not acting irresponsibly here. It's simply in terms of the approaches that Steve was mentioning. With the PMO based drugs, which we have in the clinic in the case of the DMD program, AVI has had quite a lot of experience with those drugs, both in animals but more particularly, almost 400 patients have been dosed. Actually in some cases, up to 4 milligrams per kilogram per day for 28 days, without any adverse events. And so from that point of view, I think the formality of box checking for mouse toxicological data, perhaps weighed less heavily with the MHRA than with the FDA. But the bottom line is, in both cases, as one runs towards drug approval, it is effectively based on the same data. Sometimes, there are just slight differences in the order in which that data is actually collected. Now, I think again, there has often been more traction at early stages in Europe, simply because of a different type of regulatory approach and philosophy than one sees in terms of the FDA. But at the end of the day, the US is the world's largest free pricing market still and so the Company is intently focused here. We're coming back to the FDA at a time when, not only will we actually have the mouse toxicological data but we'll also have the human experience from the UK in this instance.

And so if I extrapolate -- thanks for the clarification. But if I extrapolate you could potentially be in front of the FDA by let's say the third quarter when the third cohort or results may come in?

Those timings are highly likely to be coincident and that's obviously, what the Company is starting to look towards. New data is always important for the FDA and that new data will be both human data and also mouse data we believe.

Great. Just regarding the pandemic programs both in Ebola and Marburg, can you give us an idea as to -- I know the -- you're going to get the bridge funding but can you give us an idea as to when the safety trials may begin?

So yes, so we are currently planning those. We've had some feedback from the FDA on the protocols that went in and were reviewed as part of the IND and we are busy assembling some revisions to the protocol. We will then have those discussions with the FDA. In fact, I visited a potential site last week and we are certainly gearing up to be starting those as soon as possible, probably around the summertime.

Got it. And this -- I know that these applications fall under a particular type of regulatory statute. Could you just remind us what that is and how the two animal rule and safety studies sort of work together to allow for a stockpiling grant or some sort of revenue generation there?

Well, I'm happy to speak to the animal rule. It is actually the animal rule and it doesn't necessarily state two species. It does encourage companies to use two studies to demonstrate efficacy. And we will be presenting that, along with safety data from humans, so it has basically two components, animal efficacy and human safety. And the animal efficacy, obviously, because it's not possible to go out and prospectively do studies in the clinic in humans with Ebola or Marburg. And then obviously, there are further commitments that we have to make to look at outbreaks or potential applications of the drug once it's been approved. So there are a number of issues that we have to address. And I'll allow Dave to talk about--

If I may, could you just explain, so this notion of a validated animal model for the efficacy data? And then, we'll go to the stockpiling bit.

Yes, okay. So the validated animal model, one of the things that's important is that you have to choose a model, ie. an animal in this case, that behaves when exposed to the virus, as you'd expect a human to behave. And so you try and choose an animal that gets all of the symptoms in a similar sort of sequence, generally has a similar outcome, ie. in this case, generally fatal to the virus. And you hope then that by exposing the animal to the virus under experimental conditions with your drug, that you will obviously see survival. And that's indeed what has happened so far. And we believe that the animal models that we are choosing will be deemed appropriate and acceptable.

And just a follow-up then on the stockpiling part. What needs to be fulfilled there besides these tests? Is there formal RFP required or can you apply for it on your own? Does the government have to ask you guys?

Well, there is an RFP. The interesting thing about stockpiling and this is Dave, is that stockpiling can be provided based on data, which should be available at the time of NDA submission rather than approval. So, as we move through the development, hopefully fairly quickly compared to normal development, once we get to the point where we do have positive data and are filing the NDA, we could then become a candidate for stockpiling type of contracts. And just to put sort of the opportunity into perspective and certainly this is not the universe but a couple of examples of the size of these contracts. Cangen, I know has had a stockpiling contract for roughly $360 million. Emergent BioSolutions, I believe for their anthrax vaccine, has a stockpiling contract for I believe just in excess of $400 million. So, these are very significant opportunities for the Company for these particular therapeutic candidates.

Right, thank you for the clarification. Just two questions left. One is, can you give us an idea -- clearly, you guys have transformed as a Company and the data that's coming out is quite robust. Has there been an increase in talks from partners? And we already have highlighted and know of certain big pharmas and big biotechs who are looking into the space. Can you give us some color as to how partnerships are going and whether you think you might be able to secure a partner this year or whether you want to?

Yes, no, thank you very much indeed. I think, first of all, you can imagine that particularly in terms of the DMD franchise opportunity, as you will understand, DMD is a series of drugs, probably in our case, we've signaled up to five drugs would allow us to treat more than 50% the patients that could be treated by exon skipping. In principle, about 80% of all DMD cases could be treated by exon skipping. But it would actually ultimately require about 60 unique drugs to do that. So I think there's some regulatory challenges, which the foundations and parent groups are going to be extremely important in working with academia and also the regulatory authorities to actually clear that particular path through. I think for DMD, though, those five drugs that we've been talking about for exon 51, 45, 53, 44, and 50. 51 & 50 are the ones, as you know, we've already got actually in train in the Company. Those are in fact approvable, we believe, by, if you like, the classical route. There are enough patients, one can actually do a classical development program. So I think the way forward is quite straightforward.

Now, directly on your question. One could argue for conversion of a very high proportion of the annual healthcare costs into drug pricing for a drug that works. This was very much originally pioneered by Genzyme and is now being quite assiduously copied by Shire, by BioMarin, by Teva, by a whole series of companies, all essentially looking at drugs that effectively cost between $100,000 and $200,000 per annum. So DMD, by the time a child is actually in the -- or actually a young boy is in the non-ambulatory phase, you're looking at healthcare costs in the order of between $400,000 and $500,000. So there really is a very good margin for improving the economics of healthcare delivery in this regard. And so, this specialty pharma type play really is something, which is very much appreciated, both by large pharma and also the emerging small and medium sized pharma.

These are obviously difficult decisions to make in the sense that if you do a deal early, before you actually have the clinical data that would actually derisk these drugs, make them more attractive, allow a Company like us to actually command a more attractive deal structure. I think what you're seeing now is that the Company, from a financial point of view, is able to go forward now and look to support those DMD trials, essentially, to look at the data on efficacy. We have both 51, which is a PMO, and 50, which is a PPMO in or heading for the clinic. And I think it's going to be a matter of the point at which we believe we can abstract greatest value for the Company and our shareholders by doing such a deal. So, in that implicit, is that discussions have been going on quite intensively. But it's at a point where, in fact, I think the Company is in a much better situation financially to be able to actually keep some of the value for itself. And really, that's what the management team is looking towards being able to do.

I think the other large area of partnerability within the Company, clearly, is the biodefense programs. There are things now, which the Company is starting to do, which again signs, if you like, the growing maturity of the Company. So for example, looking at the necessity of outsourcing our manufacturing capabilities is because, in fact, now it's starting to get to a point where one is looking forward for the pivotal study and also the go to market supply. In AVI, we're enabled essentially to go to GMP manufacture up to the end of Phase II. So again, all of that together, the stockpiling opportunity, the contracts, which are now subject to public solicitation, all looks like now an opportunity where a biodefense specialist Company we believe could actually add value.

It's no coincidence that those sorts of companies sit around Beltsville in Maryland and we're actually on the West Coast in Oregon. So I think that there's lots of opportunities here. What you I hope, Reni, though and certainly will have picked up, is the Company's economic viability allows us, we believe, to take those opportunities at the right time of our choosing. And that we're not taking part in an unequal negotiation.

No, that definitely comes across crystal clear. One final question regarding data presentations for the year and milestones. Can we just list them off as you see it in order?

Yes, obviously in the first quarter, I think you obviously have seen already the signaling that we expect submit the data for the IM study. We've discussed that already. Secondly, the first patient dosed in study 28, which is our IV study. I think also the milestones around AVI-6002 and 6003, which effectively is our response to the public solicitation for the Ebola, Marburg contract. So some time in the summer, we actually are looking for some good news around that, if we're successful. We're expecting then, to initiate also the Phase I safety studies. Those will start when the contracts are awarded.

As you know, biodefense by its nature, in which we conduct that research in AVI, the research and development is effectively highly variable. It's not a fixed cost, so if we get those contracts, we'll do the work. If we don't get the contracts, we won't do the work. And so basically, the Company is not impaired one way or the other. Though obviously, to actually have the contract and the accretive nature of that cash flow is clearly very very important. At the same time, we're expecting then the monkey dose titration studies for efficacy to be available, again, some time during the summer this year. Probably the Oregon summer, maybe not actually the East Coast summer. A situation where, hitherforto, remember we've only looked at for example, with Marburg at 30 and 40 milligrams per kilogram. And in both cases at 100% survival. So we obviously have some see room there for titration.

I think importantly in the DMD program, as you heard Steve mention, in the third quarter, we should be in touch, we believe, with the predicted therapeutic range when we get into the third cohort. We're expecting, also in the third or the fourth quarter, to have the first possibility of possibly HCV data. Though more likely as Yale was signaling, it's probably going to be early next year. And then of course, I think the FDA administrative hold being lifted, that's something which the Company is looking forward to, obviously, with a great appetite. But I think that is towards the end of this year.

And then finally, as already has been indicated from our partner Cook Medical, their global therapeutics company is expecting to have data available on the restenosis open label Phase I2 efficacy study on AVI-5126 by the fourth quarter. You probably know also, Reni, that normally Cook uses the TCT Conference to present all less significant data. And I think, when successful, this will certainly be significant data. So I think actually a good year for AVI. A year where, I think for the first time, we can sort of look forward with some, both technology leadership and also financial confidence. So I think -- the management team is really motivated by what we've got to do this year.

And that is all the time we have for questions today. I'd now like to turn the call back over to Dr. Hudson for any additional or closing remarks.

Andrea, thanks very much indeed. Listen, thank you all for joining us today to hear about AVI's progress but more importantly, prospects. We look forward to keeping you updated, as we have indeed some very significant milestones that we've laid out for the Company in 2009. I think the pipeline focus, which we established during last year will remain. Getting product candidates is extremely important but I think now, we're starting to think about the other research opportunities that are in our pipeline. We need to move some of those forward and now have the financial strength to do so.

The other thing is, we're looking to strengthen our business development team. That's a very active area where, in fact, we believe we'll have some major opportunities of bringing on some really first rate people. Quite simply, because what we have to offer in partnership, really we believe, will be highly significant. Thank you all very much indeed for listening. And it's been a great pleasure answering your questions. Thank you and goodbye.

And that does conclude today's teleconference. We thank you all for your participation. Have a great day.