Sarepta Therapeutics Inc (SRPT) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the AVI BioPharma fourth-quarter and year-end 2011 earnings conference call. My name is Keith, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will have a question and answer session.

(Operator Instructions).

As a reminder, today's conference is being recorded for replay purposes. And I would now like to turn the conference over to your host for today, Ms. Erin Cox, Manager of Investor Relations. Please proceed, ma'am.

Thanks, Keith, and thank you for joining today's call. Earlier today we released our financial results for the fourth quarter and year ended 2011. The press release is available on our website at www.avibio.com, and our 10-K will be filed on or before March 15. Joining me on the call are Chris Garabedian, our President and Chief Executive Officer, and Mike Jacobsen, our Vice President of Finance.

I would like to note that during this call, we will make a number of statements that are forward-looking, including statements about the development and clinical status of AVI's product candidates and their potential efficacy, clinical results, intellectual property position, revenues, expenses, potential funding from the government and other sources, and collaboration and partnering opportunities. These forward-looking statements involve risks and uncertainties, many of which are beyond AVI's control.

Any of such risks could materially and adversely affect the business, results of operations, and the trading price of AVI's common stock. For a very detailed description of risk and uncertainties we face, you are encouraged review the official corporate documents filed with the Securities and Exchange Commission. With that, let me turn the call over to Chris Garabedian, AVI's President and Chief Executive Officer. Chris?

Thank you, Erin. Good afternoon, everyone, and thank you for joining us. I'm pleased to provide you with an update and overview of our activities and accomplishments since our last quarterly update, along with our financial performance in the fourth quarter and for the full year of 2011. We have continued to realize significant progress in our value-driving programs, particularly in our rare disease programs for the treatment of Duchenne Muscular Dystrophy and our antiviral programs for the treatment of the life-threatening hemorrhagic fever viruses of Ebola and Marburg. There is a lot of information to cover on the call, so I will begin by providing a detailed update on our DMD program.

We completed our placebo-controlled portion of study 201, our Phase IIb study of eteplirsen in Duchenne Muscular Dystrophy in February. I'm extremely pleased to announce that we are on track to have top line results of our placebo-controlled 24 week data by the end of April. This is a seminal event for the Company, in that it will help us evaluate the potential disease modifying effects of our drug compared to an untreated placebo cohort. Importantly, we were very careful to include enrollment criteria in that trial, that enhances our ability to detect the treatment effect over a 24 week time frame.

We did this by establishing a inclusion criteria that captures progressive disease. For example, we enrolled boys that were at least seven years of age at the time of enrollment, and also required a certain walking distance on their six minute walk test, specifically between 200 and 400 meters walk that will be informative for predicting a progressive decline of ambulation, and other muscle strength and performance end points. While we were very encouraged by the biochemical evidence from our previous UK study, as it showed that 10 milligram per kilogram and 20 milligram per kilogram, dosed once weekly by IV infusion produced increases in novel dystrophin in every patient, as well as dose-dependent reductions in inflammatory T cell infiltrates in the muscle biopsies.

It is important to note that our current study 201 trial evaluated higher doses, over a longer duration of treatment than what we saw in the previous study. As a reminder, 12 patients in study 201 received once-weekly intravenous infusion of either 50 milligram per kilogram of eteplirsen, 30 milligram per kilogram of eteplirsen or placebo. We had recently amended the study to a [one] protocol to include four weeks of open label eteplirsen, which allowed the patients to receive uninterrupted continued dosing of eteplirsen, and immediate roll over of placebo patients to open label eteplirsen. This amendment also gave us sufficient time to set up and train the local institutions that will be dosing these patients closer to their hometown, rather than to fly these families weekly to Columbus, Ohio where the placebo-blinded portion of the study took place.

Study 202, which is our extension study to study 201, and which will assess the long-term safety and efficacy of Eteplirsen, received IRB approval and has already begun dosing the first few patients -- these patients were initiated dosing this past week. We now have 6 patients on 30 mgs per kg, and 6 patients on 50 mgs per kg, and we will have 48 week safety and efficacy data in 8 of these patients, and 24 week data in 4 of the original placebo patients by the end of this year. We have also requested an additional biopsy in study 202, which will occur at 48 weeks in the original study 201 treated patients, and at 24 weeks, the same time point, in the original placebo patients. These biopsy data will be important to understand the steady-state or potential plateau levels of dystrophin, as the dose is tested at the 48 week time point., in addition to adding to the earlier biopsy data sets at 12 weeks and 24 weeks.

Finally, we will continue to capture clinical outcomes from these patients in study 202 during this open label phase at 36 weeks, 48 weeks, and every 12 weeks, through the 108 weeks from the original study 201 initiation of dosing. We also believe these additional biopsy results, along with the additional longer term clinical outcomes and safety, will be useful in our discussion with the FDA, as we discussed the fastest path toward approval. Additionally, we have an update related to our long-term animal tox program. And I'm pleased to say that we have completed dosing in our 9 month primate study, our 6 month mouse study, and our 12 week juvenile rat study. We expect to have final data sets by the end of the second quarter for all of these studies.

We will plan to put these study 201 Phase IIb study results, along with the long-term animal tox program results into a briefing document to request an end of Phase II meeting with the FDA in the third quarter of this year. The purpose of that meeting with the FDA will be to discuss the design of our pivotal study, including gaining feedback on the acceptable endpoints for approval. We are still planning to have a larger confirmatory study for eteplirsen ready to enroll by year-end, with dosing to begin in the first half of 2013. We have continued to make process improvements in our manufacturing of eteplirsen, and are preparing our contract manufacturers to deliver drug supply for our pivotal study, as well as our ongoing extension study.

Since our last earnings call, we also announced we are actively pursuing development of a product candidate that skips exon 45 through an IND enabling collaboration with Children's National Medical Center and Carolinas Medical Center. And we are also finalizing the terms of a second IND enabling collaboration through NIH's TREND program, the Treatment of Rare and Neglected Diseases, which was Francis Collin's brainstorm to assist in translating promising technology from the bench to the clinic. And we were pleased to win support for the development of a product candidate that skips exon 50. We expect that these 2 additional exon-skipping drugs will be ready for initial clinical trials by the end of 2013.

Furthermore, these two collaborations along with our eteplirsen program, form the foundation of our larger pan exon development program, and may serve as a linchpin in the pursuit of a class approval of our backbone chemistry for DMD. We believe a class approval is possible if we can demonstrate sequence-dependent efficacy and sequence-independent safety and pharmacokinetics at a standard dose, and using the same manufacturing process to produce the same quality of product. Because of the breadth and diversity of genetic mutations across the DMD population, several dozen drugs would be required to treat every DMD patient with our technology. And a class approval would be the only feasible way to make the drug available for the majority of exon skipping amenable DMD patients, including those with less prevalent genetic mutations.

Related to our pipeline of follow-on DMD drugs that target other exons, we had an important hearing with the European Patent Office in November of last year where we opposed what we considered an overly broad patent that had claims to 11 of the most prevalent exon skipping targets, including our lead program targeting exon 51. We invalidated or amended claims to 9 of the 11 exon skipping targets, and strengthened our freedom to operate in the European Union for our overall DMD development program. However, of the two exon skipping targets for which we did not prevail, one was for the target of our lead program, exon 51.

Although the written decision of the opposition hearing has not yet been posted by the European Patent Office, we are preparing to submit an appeal later this year, or within four months of the posting of the written decision. To put this patent decision in the context of the worldwide market opportunity for our DMD program, an approval of just the top 4 or 5 exon skipping drugs, would triple the US opportunity beyond eteplirsen. And with the favorable patent decision on the top exons beyond exon 51 in Europe, the market opportunity for these top exons across US and Europe is more than six-fold greater, than the US-only opportunity of our lead product, eteplirsen.

Overall, our DMD program is at a critical inflection point, and if the 24 week data from our eteplirsen study is favorable, and shows the benefit on clinical outcomes that we are hoping for, we will be intent on exploring the fastest path toward approval of the drug with the FDA. We believe it is an exciting time to be developing therapies for rare diseases like Duchenne, and it is a time when we are seeing an alignment of goals across industry, patient advocacy, the legislative agenda, and the FDA. As evidence of this, today the FDA is hosting their first Rare Disease Patient Advocacy Day designed to connect patient advocacy groups like the National Organization of Rare Disease and the Genetic Alliance with the NIH and the FDA, in the interest of increasing awareness and collaboration. And just yesterday, the NIH hosted their fifth annual Rare Disease Day, in which AVI participated to show our solidarity with other rare disease companies, advocates and stakeholders.

Now I'll turn attention to our government-sponsored infectious disease programs, where we continue to advance our two drug candidates for the treatment of the life-threatening hemorrhagic fever viruses of Ebola and Marburg. We had our final Drug and Safety Monitoring Board review of the completed Phase I single ascending dose or SAD studies earlier this year, and the DSMB concluded that the drug is safe at the highest doses tested of nine milligrams per kilogram.

This is an important finding, in that it demonstrates the safety of our morpholinos in the clinic, with one of our next-generation chemistries that we refer to as PMO Plus. Specifically to date, this chemistry is a positively charged version of our morpholinos, which has shown greater antiviral efficacy without drug-related adverse events in human subjects. We are now preparing for the multiple ascending dose or MAD studies in healthy volunteers. And we are looking forward to exploring multiple doses and potentially higher doses than nine milligrams per kilogram, which will help us understand and possibly widen the therapeutic window, for not only our Ebola and Marburg drug candidates, but for future applications against emerging viral and bacterial targets utilizing the same backbone chemistry. These MAD studies are planned to start in the second half of this year.

In parallel to the safety studies for these two drugs, we have also begun a series of studies in primates to establish the optimal drug component, dose, activity, and pharmacokinetics to determine the appropriate design for our pivotal studies in primates to support approval of these drugs under the FDA's animal rule. We have completed the first of those studies to determine the most effective dose and drug component to proceed with our Marburg program. Earlier this week, at the ASM, the American Society of Microbiology Biodefense and Emerging Infectious Disease Research meeting held in Washington, DC, we announced data from a Marburg primate study where we showed that our drug candidate, AVI-7288, achieved 100% survival at the end of treatment at 14 days, and through the end of follow-up at 14 days, compared to 0% survival at those time points for the untreated controls.

Importantly, we have also demonstrated that AVI 7288 on a stand-alone basis was efficacious as a single agent at a dose of 15 milligrams per kilogram, compared to the previous combination therapy that we had been testing against the Marburg virus. To this end, we have made an amendment to the current open IND to proceed with the active component of what was formerly known as AVI 603, which will be now referred to as the single agent, AVI 7288. We are in the middle of a similar study for our Ebola drug candidate, where we are evaluating the active components of the drug as single agents, versus the combination drug AVI 6002 that had been previously tested. We should be able to announce top line results from this study in the coming months.

Last year, we had a modification to the contract with the Department of Defense which supported completion of our multiple ascending dose studies, and all of the primate studies prior to our pivotal studies, within our current contract module. The first of four, which will -- which would come to fruition, the first module in mid 2013. So over the next year, through the middle of 2013, we are on track to complete our multiple ascending dose studies, and the additional primate studies, which include a PK/PD studies in primates, and delayed time-to-treat studies in primates, all of which we'll also be looking at efficacy and survival endpoints.

While we are on the subject of our execution of the government-sponsored programs, I'd like to take this time to provide an update on some organizational changes at the Company, many of which have enhanced our ability to execute on the current government programs, as well as support the potential award of future contracts with the Department of Defense, and other government agencies that support research for medical countermeasures and pandemic planning. First, we announced the hire of our Senior Vice President of Technical Operations, Jayant Aphale, who has significant experience in scaling up drug production in anticipation of late stage clinical trials and commercial approval.

Prior to joining AVI, Jayant was the VP of Manufacturing for GlaxoSmithKline, where he was based in Belgium overseeing their vaccine production facilities and capabilities. Prior to GSK, Jayant was at Enobia, helping that company prepare for late stage clinical development and commercial scale for a fusion protein to be applied in the area of rare disease. Both of these experiences, and Jayant's expertise in manufacturing operations and scale-up, are well-suited for both our DMD program and our infectious disease applications with the government.

We have also made some additions at the Vice President and Senior Director level that will also strengthen our support team on the government and DMD programs. Specifically, we hired Diane Berry as our Vice President of Global Health Policy and Government Affairs. Diane has spent most of the last 10 years working at various federal agencies on Capitol Hill, and built an expertise and high level contacts across these organizations, that are charged with developing the government's programmatic, legislative and funding priorities for medical countermeasures, and executing to those priorities.

She most recently was the Chief Scientist and Director of Threat Characterization and Countermeasures in the Office of Health Affairs at the Department of Homeland Security, where she served as the nexus between the Department of Homeland Security and the Department of Health and Human Services, on medical countermeasure issues, primarily through her role as the public health emergency medical countermeasure [enterprise]. We also recently hired Theresa Moody as our Senior Director of Project Management to oversee all of the activities across our Ebola and Marburg programs. Theresa joins us from Quintiles, where she spent the last 10 years working almost exclusively on government-sponsored infectious disease programs. Here, Theresa became an expert in complying with government regulations and guidelines, in support of these programs, in addition to becoming an expert at writing proposals for various agencies to ensure the best chance of contract awards.

Additionally, we hired Robin Wallace as our Senior Director of Clinical Operations to oversee and manage the clinical aspects of both our DMD and Ebola Marburg programs. Robin brings with her more than 15 years of global clinical trial management in -- at the CRO and pharmaceutical biotech side of the industry. She has been a successful trainer and mentor of clinical trial associates and managers, and is bringing a high degree of professional excellence to our Company.

Lastly, I regret to inform you that Effie Toshav, our General Counsel and a Senior Vice President of the Company tendered her resignation effective last Friday, February 24, to pursue other opportunities. We are sad to see her leave, and are thankful for her many contributions to the Company during a critical time of transition over this past year.

Our staffing has changed quite a bit over the last year, and it culminated in a reduction in force of about 30% of our full-time staff in December. We also reduced the non-essential activity, and cut our reliance on a variety of contract workers and consultants. As we began 2012 with approximately $40 million in cash, we believe that this effort to focus on the most essential activities and staff required to execute our priority programs has made as a leaner, more efficiently run organization that is better equipped to manage our cash burn.

With that, I'd like to turn the call over to Mike Jacobsen, our Vice President of Finance and Principal Accounting Officer, who will review the financial results for the quarter.

Thanks, Chris. First let me begin by discussing our fourth-quarter results. I will then address the results for the full-year, and conclude by providing some overall financial guidance for 2012. For the fourth quarter of 2011, AVI reported an operating loss of $9 million, compared with an operating loss of $1.7 million in the fourth quarter of last year. The increase is primarily the result of a $1.9 million decrease in government research contract revenue, and a $4.8 million increase in our R&D expenses. Revenue for the fourth quarter of 2011 was $13.6 million. This is down slightly from the $15.5 million one year ago.

The decrease was primarily due to the completion of the H1N1 flu contracts in the second quarter of this year, partially offset by incremental revenues on the current segments of our Ebola and Marburg government contracts. R&D expenses were $18.7 million in the current quarter, compared to $13.9 million in the fourth quarter of last year. The $4.8 million increase was due primarily to incremental activities for Ebola and Marburg, additional spending on our DMD product candidate just completed Phase IIb clinical trials, and severance costs associate with our December 2011 reduction in force. These increases were partially offset by decreased [N1H1] spending. G&A expenses in the fourth quarter were $3.9 million, compared with $3.4 million in the fourth quarter of last year. The $500,000 increase was due to our severance costs associated with our December 2011 reduction in force, and slightly higher consulting costs.

Now let's take a minute, and look at our full-year results. For the year 2011, the operating loss was $35.9 million, compared with an operating loss of $20.9 million for 2010. The $15 million increase was primarily the result of increased R&D costs of about $31 million, partially offset by the increase in our revenues of $17.6 million. Revenue for this year was $47 million, compared to $29.4 million for the prior year. This increase was primarily due to the additional revenues on the current segments of our Ebola and Marburg government contracts, partially offset by the completion of the H1N1 flu contracts in the second quarter of this year.

R&D expenses were $66.9 million this year, compared with the $36 million for the prior year, an increase of approximately $31 million. The increase was due primarily to $23 million in incremental expenses related to Ebola and Marburg research, $6.5 million in expenses related to our DMD program, $5 million in other incremental R&D, and about $4 million in additional manufacturing activities. These increases were partially offset by about $5 million reduction in costs related to the H1N1 flu contract.

G&A expenses for 2011 were $16.1 million, compared to $14.4 million for the previous year, an increase of $1.7 million. The increase was primarily the result of a $1.4 million increase for personnel-related costs, and a $1.1 million increase in consulting costs. These costs were partially offset by decreases in legal and severance costs of approximately $500,000 each. The net loss for the fourth quarter of 2001 -- or 2011 was $1.4 million or $0.01 per share, compared to a net loss for the fourth quarter of last year of $7.6 million or $0.07 per share.

The $6.2 million decrease in the net loss was primarily due to $13.4 million in other income associated with the change in the valuation of our outstanding warrants, partially offset by an increase in operating loss of $7.3 million. For the full-year 2011, our net loss was $2.3 million or $0.02 per share, compared to a net loss for 2010 of $32.2 million or $0.29 per share. The $29.9 million improvement was primarily due to $44.5 million of other income attributable to the change in the valuation of the warrants, partially offset by a $15 million increase in our operating loss.

Turning to the balance sheet, we had cash and cash equivalents of approximately $40 million as of December 31, 2011. This is an increase of $6.3 million from December 31, 2010. The increase was due primarily to the April 2011 public stock offering where we raised $32.1 million, offset in part by $23.7 million of cash used in operations during this year.

Now let me turn to our 2012 guidance. For 2012, we are anticipating revenue of $40 million to $50 million, and an operating loss of $30 million to $35 million. In addition, we anticipate that our capital spending on patents and equipment will be approximately $1.5 million, and the non-cash expenses for stock comp, depreciation, amortization will be in the $4.5 million to $5 million range. As you recall, our other income expense was primarily driven by the fair market values of our outstanding warrants, which is a non-cash item that is heavily influenced by fluctuations in our stock price.

With regards to our quarterly splits, our first quarter revenue will be approximately $2 million to $3 million lower than the remaining (technical difficulty) due simply to the timing of third-party manufacturing activities on our Ebola and Marburg contracts. We believe we will continue to receive funding from our existing Ebola and Marburg government contracts, and we have assumed this revenue -- assumed this revenue in providing this guidance. Additionally, with this funding, we believe we will have sufficient cash to fund our operations for at least the next 12 months. If we do not continue to receive this funding, our guidance would naturally change.

With that, I'll turn the call back over to Chris.

Okay. Thank you, Mike. Operator, you can open up the call to questions.

(Operator Instructions).

And your first question is from the line Ted Tenthoff of Piper Jaffray. Please proceed.

Great. Thank you very much. It sounds like some exciting hires, and a good way to start out 2012. So with the statement that you're going to have 24 week data unblinded by the end of April, will you be sharing that with us then, or will you be receiving it?

Yes, we will be sharing top line preliminary results from that 24 week unblinded data set. As you know, Ted, we are a public biotech Company. We are going to basically disclose when we get unblinded data. We're going to try to assess and analyze it, in a top line fashion as quickly as we can, and put out a press release. Obviously, it is a very rich data set. There is a lot of information that we will have, and it will take a while to really understand everything that the data is telling us. But we will get the most salient top line information disseminated in the form of a press release, and that is really what I'm referring to happen by the end of April.

Great. That is really helpful, Chris. And then when it comes to the new drugs that you are working on for exon 45 and 50, do you think you would have that, or when do you think you might be able to file IND for those programs?

We are optimizing the lead optimization for those programs, and we still have a lot of IND enabling work to do. And we have to meet with the FDA to ensure that our thoughts and plans for what is required to get the product into the clinic, or both of those products into the clinic will be sufficient. So, that is what will take place over the next year. And we are hoping that we would have an IND filed and be ready for clinical trials by the end of 2013.

Excellent. And then just one last quick question. While you were giving guidance, you mentioned that there is a $4 million to $5 million charge, and I missed what that was for in 2012 guidance?

Yes, that one was the non-cash effect of the stock compensation and depreciation and amortization.

Okay. Excellent. Thank you so much.

All right. Thanks.

Your next question is from the line of Marko Kozul with ThinkEquity. Please proceed.

Hi, good afternoon, and thanks for the comprehensive update. Chris, maybe first question, you mentioned the [accrene] DSMB review for the highest dose 50 milligrams. I was wondering, if and when you'll present that data. Will that be part of the end of April update?

Yes, so, yes, we basically had the 12 week 50 milligram per kilogram DSMB in January, where they were able to look at the biopsy data. Yes, we expect that the top line data will include both data from the 12 week 50 milligram biopsy results, as well as the 24 week 30 mg per kg pre and post-. Now again, we are collecting a lot of parameters at this point, it's hard to predict exactly what will be shared. But we expect that there will be an element of biopsy data in that -- top line results.

Previously, we had suggested that we might have an interim look. We have since provided guidance, Marko, if you have been following it, that we didn't want to risk unblinding. And so we have not seen any of the interim biopsy data to date, neither I nor Ed Kaye, nor anyone at AVI has seen, or looked at, or had exposure to the biopsy data. And that was for the purpose of protecting the blind.

All right, perfect. And then, you mentioned enrollment criteria for the Phase IIb study, that -- I was wondering if you could differentiate, maybe talk about the enrollment criterion, and how you think they compare to enrollment criteria for some of the other competing DMD drugs that are out there?

Yes, no, and the reason I highlighted it Marko, is because I think it is one of the more thoughtful ways we approached this study, especially when you're dealing with small sample sizes. We knew that a placebo arm would be important to show a true treatment effect. And we knew the best chance to show a treatment effect in a 24 week time frame, was to try to get a patient population that was likely to show some level of decline over that 24 weeks. And so, we did a few things. We looked at the literature on natural history, and a lot more has been generated over the last couple of years on the natural history of DMD, and what those predictors of decline are.

We learned from other companies who have done studies in the area, like PTC did a blinded placebo-controlled trial for their drug Ataluren, and understood what were the confounding factors based on their patient population, and their inclusion criteria that might have made it harder for them to have shown an effect. We looked at other competitive data sets. So, that's why I highlighted the 7 years to 13 years is the age range that we felt would show that more progressive rate of decline. And the six minute walk test baseline score between 200 and 400 meters walk was also suggestive of a patient population that would be in the decline.

So, I'm not as familiar with the details of our competitors. There is one main competitor that we have, GSK, Prosensa product, that is also targeting exon 51. I do know, in their open label results that they've shared, they had much broader inclusion criteria and included patients who were much healthier at baseline. And many of the patients in their open label study would not have qualified for enrollment in our study. So, I think that hopefully answers your question, about how it is differentiated from other data sets in the DMD space.

Yes, that is perfect, is very helpful. And just last, congratulations on all the new hires. Are they being brought on primary to advance the hemorrhagic virus program, or is this part of a broader strategy to drive maybe additional and future government contracts by advancing some of your earlier programs, including dengue and the antibacterial programs as well? Thanks.

The short answer is both. The people I highlighted are part of the broader operational leadership team, and they bring great skills and can manage and influence, doing the right things on both sets of programs. Obviously, Diane Berry and Theresa Moody can lend a lot more experience on the government side of things. But we can also use their expertise -- for example, Diane Berry is already helping me work on some of the legislative agenda in the rare disease area. There is areas in global health that we have not really focused on, that she is helping me focus on.

So, again, Theresa Moody is an excellent project manager and we can learn a lot from her, to apply that to the DMD space. Robin Wallace spent most of her time as our Senior Director of Clinical Operations, focusing on making sure our DMD program was intact, doing the right thing, could pass any audits by the FDA during inspections, et cetera. Now she is applying the rigor to make sure we're doing the same thing with our MAD studies, for example, on the government side. So, I think it is part of my operational leadership team, and expect them to contribute across both sides of the business.

Perfect. Thanks for taking the questions, and I look forward to your progress.

Your next question is from Ren Benjamin with Rodman & Renshaw. Please go ahead.

Hi, good afternoon, Chris, and thanks for taking the questions. I guess just a little bit of clarity. Maybe I just missed it in your prepared remarks, but are 201 and 202, complete and distinct studies that are running? Or is 202 kind of a -- the rollover extension phase of 201?

Yes, Ren, study 202 is the extension, right? So it is the rollover. It's again, as you know, it is common and usually preferred, that once you start a cohort of patients, if at all possible, it's great to get uninterrupted dosing, to show in the case of a chronically -- chronic disease that is going to need treatment potentially for a lifetime, that you want to gain uninterrupted dosing from a safety standpoint. And to measure, while you are at it, get some efficacy measures as well.

So, this is the rollover extension study. We've designed it for an additional 80 weeks, okay? From the study 201, 28 weeks, again 24 weeks blinded portion versus four weeks open label. And that, as I mentioned, was to prepare all of the remote local sites to take these patients and continue following them. So, it's basically we will have at the end of study 202, we will have 108 weeks of data on the initial treated cohort. And then again, about 1.5 years of data on the placebo patients who crossed over.

And just, I think you mentioned that you would be collecting clinical data every 12 weeks or so, in that extension phase. Would that mean -- is that correct? And if so, since it's open label, would it be possible or would we be getting updates every 12 weeks, as to how the data has continued to progress?

Yes, I mean, that is one of the benefits and beauties of an open label study, is that unlike the blinded portion which you have to clean and scrub, before you lock down. And once you unblind, you can't go back. Open label oftentimes is reported as unaudited data, in a more timely fashion. We obviously would need a little bit of time to make sure we analyze it, and understand what the date is telling us. But, yes, we would anticipate continued communications and updates in the open label portion of that study, both safety and efficacy. And again, that is why we are excited to have gotten all these patients rolled over.

Okay. And just regarding the clinical parameters. Can you just review for us, what should -- when the top line results come out, what should we be focusing on? You mentioned that you are looking at a lot of data points. And I'm sure you're going to specify which ones you think are most important. Can you just give us a heads up, which are the ones you think are most important? Should we be looking for an improvement in these parameters? Or is just a decrease in the decline, a good enough result to move forward?

Yes, it's a great question, Ren. So first of all, this is the first placebo-controlled study with exon skipping effects in DMD. And so, we don't know what to expect, because we have never seen an exon skipping drug tested against a placebo group. So, what I anticipate, and again, how we selected these patients is -- I'm guessing, again we don't know until we unblind, that the placebo group will show some level of decline on at least some of the parameters we are looking at.

Whether the treated group shows a stabilization, an increase, which I think would be beyond expectations, if these boys were getting improvements, right? Or, do we just show a significant mitigation of the rate of decline, which could also be a win for the treatment effect. So, it ultimately is the delta that we are going to be focusing on. What happened to the placebo group from baseline over 24 weeks, and what happened to the treated group, and how large is that delta on a variety of parameters?

Now, we did capture a lot of critical endpoints, and it is hard to predict which ones will show the greatest treatment effect. And it is one of the reasons we looked at a lot of endpoints, because we don't know what exon skipping and producing dystrophin will actually produce. Is it going to have a greater impact on six minute walk? Is it going to have a greater impact on muscle myometry strength testing, the [MBITTS]?

Maybe we'll see a greater impact on the four stair climb test, or the 10 meter walk as part of the North Star Ambulatory Composite Score. So part of the analysis will be focused on, where are we seeing the greatest treatment effect, and how meaningful is that treatment effect? So, again, I can't be too prescriptive at this point. But again, we will highlight what we believe demonstrates the impact that our drug is having on the disease.

Okay, and just a final questions for me. Just regarding any sort of partnership talks or discussions that may or may not be going. Can you give us any color? Is there an excitement in the field, at least given what pharma is going through, and a lot of the acquisitions that are taking place right now? Do you see a heightened level of interest? And with that, are people waiting for this data, or do they want even more advanced data to formally evaluate the product?

Yes, Ren, there is definitely been interest from various pharma partners in this program, in the rare disease space in general, and in DMD, in particular. And, again, I think they have given us feedback, that they have liked what we have done over this past year and a few months with this program. I think we heard a lot of feedback that these same pharma partners did not have the confidence and faith in previous management teams at AVI could do this the right way. And I think we've addressed that.

I think at our current valuation, or the current economics that would be attached to a deal prior to the data, when the data is so close, again, doesn't make much sense -- because the -- they are not going to give us economics that would reflect what we think this data set will produce, and how much it would derisk the program. So, I think we have to see where our valuation is, post data set. We will have to see what the interest level is, in that post data. And, again, we'll have to look at the economics of interested parties.

But, make no mistake, we believe this is a program that we're managing well. We've got the right expertise, who knows how to do drug development in the rare disease space, and Duchenne in particular. And we have to be compelled, with a economic package that make sense for partnership. So again, our job is to keep this program moving, keep creating value for it. And we will see how that is reflected in any overtures from partners.

Perfect. Well, congrats on the progress, and good luck with the results.

All right. Your next question is from Mara Goldstein with Cantor Fitzgerald. Please go ahead.

Thank you so much. Just a point of clarification. On the Duchenne study, the endpoints, even though you're collecting the information, the endpoints do not specifically include these functional tests, like the six minute walk test or muscle strength or anything like that. That is purely for your use, and not necessarily at an endpoint, correct?

Mara, no, not exactly. So we are collecting all of those, as endpoints.

Right.

And -- but it is how we would describe it as exploratory. Okay? So, we have identified a primary endpoint of dystrophin, as a percent of positive fibers, as a percent of normal. Okay?

Right.

Again, a similar measure we did in our previous UK study. So, and we have a key secondary endpoint of looking at the T cell infiltrate in the muscle biopsies, pre and post. We think, even with this small sample size, that we have a chance to show statistical significance, on either of those endpoints or possibly both. And I think that is something we need to have -- or we hope to have as a foundation of our biologic activity, right?

Right.

-- and a foundation of an efficacy claim. The endpoints that we are going to be looking at, from an exploratory basis, it's hard to say if any of these could be powered to show statistical significance. But what we are intending is that, at the very least, we will see directional data that suggest there is a treatment effect, and maybe compelling data numerically, that suggest a treatment effect. And, again, the study was originally designed to inform --

Right.

-- our pivotal study. And we think that this information will allow us power, and figure out how to size the length of time we need to provide treatment in the pivotal, all of these things could be informed. Now, if we get statistical significance on any of those clinical outcomes, I think we have a home run our hands. So, we'll have to see if the treatment effect is robust enough.

Right.

To show that.

And I know this is, maybe pure speculation at this point to some degree, because you're thinking about designing a Phase III trial, which has to be done, and also looking at INDs for other compounds, but when do you anticipate you might be able to look at cocktails of treatment, cocktails or drugs for treatment?

Mara, I think that is what I would call step three. Okay? Step one, is demonstrating that our technology can produce a treatment effect with a target exon, exon 51, in this case with eteplirsen. Step two, is to reproduce similar results in terms of safety and efficacy, looking at another exon skipping application or two. Right? This would be our exon 45 and our exon 50 program that we hope to get into the clinic.

I think at that point, we hope to go to the FDA and show that we have sequenced dependent efficacy, and sequenced independent safety and pharmacokinetics, so that if we were able to get a pan exon or class approval, where maybe submitting in vitro protein expression data, or some genotox targeting these other exons, would allow us to have a group, multiple exon skipping drugs. I think at that point, then, it's a matter of combining those, right? For those features [would be] a double skip. Okay? To restore dystrophin in their genes, in gene translation. So I think, again, that is a little further afield, but it is something that we are thinking about. But I think we have to clear the first couple of steps first.

Okay. Thanks so much.

Thank you, Mara. I think we have time for one more question, operator.

Okay. Our last question comes from the line of Richard Deutsch with Ladenburg Thalmann. Please proceed.

Yes, hi, Chris. Chris, in one of our previous conversations, I seem to recall that you were discussing whether the eteplirsen platform could be expanded outside of just the Duchenne exons. And I think you mentioned to me that it wasn't able to. Can you review that, and explain why you would be able to skip exons in Duchenne, but you wouldn't be able to translate that to target exons that maybe helpful in restoring other genetic enabled diseases?

Yes, so first, Rick, I would say -- I would clarify your interpretation of what I said. So, let me be clear. We have a full research program that is focused on exploring new chemistries. We've advanced one of those new chemistries, PMO Plus, that I described, looking at antiviral targets. No reason we couldn't explore the PMO Plus chemistry to look at nonviral targets as well. We also showed demonstrable proof of concept with a peptide conjugated PMO, of which turned out to show some toxicity when dosed systemically.

But we have continued to advance peptide conjugate versions of our PMO, with the interest in getting better cell penetration into different cell types, right? To go after different disease areas, and tissue targeting, and to be able to try to start to dial up or down various PK properties, and targeting of different cell types. What I have mentioned around our PMO chemistry, which is the oldest base -- backbone chemistry we have. We refer to it as the naked PMO backbone chemistry, no longer has patent protection.

Also, the application of our PMO, which has worked well in DMD to date, when delivered systemically, seems to have better affinity for diseased cell types, where the cell membrane is compromised. Where what we have described in the DMD field, is leakier [by] cell. So in the case of DMD, when we dose our PMO systemically, it gets uptake into the leaky diseased muscle tissue, to allow it to ultimately translate that protein, and restore dystrophin. We do not see the same affinity for healthier cell types.

And so what I'd meant to convey, and you've interpreted it differently, is that we are focusing in other disease areas with our advanced chemistries, that have shown better inter-cellular uptake, better affinity for other cell types. And again, we think PMO may have applications for other disease areas. And we are exploring that with some academic collaborators, along with new chemistries. But we are not ready to disclose where those applications might occur.

Okay, ladies and gentlemen, with that, we are out of time for our question and answer session today. So I would like to turn the call back over to Management for closing remarks.

Okay, thank you, operator. Well, look, everyone at AVI is very excited about the progress we made as a Company over 2011, in the beginning of this year. We have ambitious, but achievable set of goals for this year. We are very close with the DMD data set. And we look forward to reporting on the progress of that on our next call, or before then at various conferences, and investment conferences throughout the year. So, thank you all for joining us today.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may all now disconnect. Have a great day.