福泰製藥 (VRTX) 2009 Q3 法說會逐字稿

Good afternoon. I'm your conference operator today. At this time, I'd like to welcome everyone to the Vertex Pharmaceuticals third quarter conference call. Today's call is being recorded. All lines have been placed on mute. After Michael Partridge's remarks there will be a question and answer period. (Operator Instructions). Are you ready to begin?

Yes, good evening. This is Michael Partridge. Welcome to Vertex's Third Quarter financial results Conference Call. This quarter was characterized by continued progress in two Phase III registration programs targeting diseases of significant unmet medical needs, that is Hepatitis C and Cystic Fibrosis as well as the completion of transactions that added to our financial strength. In the area of Hepatitis C at ASLD later this week, we will be presenting FBR data from Study C208. Study C208 is exploring Telaprevir's potential to be dosed twice daily or every 12 hours. These will also be the first FBR results we report for a response guided trial design which is how we are studying Telaprevir in our Phase III program to potentially improve treatment outcomes for patients. We also continue to make progress towards the start of a combination trial with Telaprevir in VX-222 in patients as early as the end of this year reflecting our strategy to sustain long term leadership in HCV.

In the area of Cystic Fibrosis we're now enrolling patients in three studies within our registration program for our potentiator compound, VX-770. We also recently announced we've completed enrollment in the Phase II Study of our corrector compound, VX-809.

Following me on today's call will be prepared remarks from Ian Smith, Dr. Peter Mueller, and Matt Emmens. I'll remind you information discussed on this Conference Call includes forward-looking statements which are subject to the risks and uncertainties discussed in detail in our reports filed with the Securities and Exchange Commission including our 10-K. GAAP and non-GAAP financial measures will be discussed on this call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our Third Quarter 2009 financial Press Release which can be accessed on our website. Unless otherwise noted all 2009 expenses and guidance discussed in this call are inclusive of stock based compensation and executive transitioning expenses, restructuring expense, acquisition related expenses and loss from exchange of convertible debt.

Before I turnover the call to Ian, I would like to remind those of you not attending the ASLD conference that this coming Sunday, November 1st, we are planning to webcast our presentation to investors and analysts and that presentation will be focused on new data for our HCV protease inhibitor Telaprevir. It will begin at 7:00 pm Eastern Time and run for approximately one hour. Thank you. I'll now turn the call over to Ian.

Thanks Michael and good evening to everyone. I'm pleased to report that Vertex continues to operate from a strong financial position. For Vertex at our stage of business, we think the most important financial measure is our cash position, balanced against the cash investment required to bring the Company to cash flow positive. We're paying close attention to this while managing the disease, molecule and geography opportunities within our business and managing our common shares outstanding. This creates a healthy tension in our business right now as we continue to prioritize planning for the NDA submission and the potential of Telaprevir launch.

As a marker of our financial strength we finished the third quarter with a position of $857 million reflecting $227 million in cash from the completion of transactions that added a total of $260 million to our balance sheet in 2009 to date. An additional $33 million from these transactions was received on October 1st and will be reflected in our fourth quarter cash position. In Summary, following the closure of our recent transaction and management of our net cash investment or loss, we expect to end the year with approximately $800 million in cash, cash equivalents and marketable securities. This enables us to enter 2010 in a strong cash position and allows us to support the advancements of late stage programs in HCV and CF as well as to initiate other proof of concept trials and continue our research productivity.

Now to the third quarter 2009 financial results. Third quarter 2009 non-GAAP loss before certain charges was approximately $127 million compared to a third quarter 2008 non-GAAP loss of approximately $115 million. The increase was primarily attributable to a reduction in collaborative R&D revenues and an increase in commercially focused investment to support advancement of Telaprevir toward launch. The GAAP net loss for the third quarter of 2009 was approximately $150 million compared to a GAAP net loss of approximately $130 million in the third quarter 2008. Total revenues for the third quarter of 2009 were approximately $25 million compared to $32 million for 2008. The principle contributors to revenue are driven by our collaboration agreements with J&J and Mitsubishi Tanabe Pharma. Total R & D expense was approximately $132 million which is consistent with the R&D expense in the third quarter of 2008. The investment into R&D continues primarily to support the development programs for HCV, Cystic Fibrosis, a new product creation from research. Our Third Quarter SG&A expense was approximately $37 million compared to approximately $25 million in the third quarter of 2008. An increase primarily resulting from our commercial activities as we prepare to launch Telaprevir.

In closing, we are fortunate to have a strong cash position to support our late stage programs. As we move into 2010, we will remain focused on the balancing of our cash position, capital structure and the investment to support the Company through to being cash flow positive. Peter, over to you.

Thank you, Ian. With my prepared remarks I want to briefly update everyone on the status of our two key registration programs in HCV and Cystic Fibrosis. I'll start with CF because our compounds VX-770 and VX-809 were prominently highlighted two weeks ago at the North American Cystic Fibrosis Conference in Minneapolis. I know most of you were not able to be there but I will tell you there is a strong enthusiasm from the medical community about the potential for these compounds to address the underlying defective protein responsible for this disease. In May, this year, we initiated the Phase III registration program for VX-770. The program consists of three ongoing separate trials, strive, envision and discover, which have been designed to evaluate the utility of VX-770 across different age-groups and genotypes including children as young as six years of age. In the registration program, VX-770 is being dosed as a single tablet twice daily. Clinical sites are up and running and patients are being dosed in all three trials. We expect to complete enrollment in the first quarter of 2010 in the strive trial, which will be a marker of progress in our comprehensive registration program. We look forward to providing additional updates as appropriate as these studies progress.

Now turning to VX-809, our second compound targeting this orphan disorder. Last week, we completed enrollment in the Phase IIA trial with VX-809 on the investigation of the FDR corrector compound that targets patients with the delta F508 mutation. The Phase IIA trial is primarily a safety study; however it is also designed to assess the potential effect VX-809 has on biomarkers of the FDR function including (inaudible) and nasal potential difference. Any trend toward improvement that indicates that VX-809 could help to increase the FDR activity would be very encouraging for further development of VX-809 alone or in combination with V X-770. Based on rapid enrollment within the study we now expect to have data from the first two trial in the First Quarter of 2010.

Now, to HCV. This week, as you heard, we are preparing to present data at ASLD the major US based liberal meeting and I know that this is of high interest to investors and many of you are focused on this meeting. At ASLD, we will be providing FBR data from the Study C208 our twice daily dosing study, which also will be the first results from a response guided trial designed that is similar to the design being used in the Advance and ILLUMINATE Phase III registration trials. We believe our response guided therapy has the potential to improve treatment outcomes and shorten the duration of therapy for the majority of patients. We can't talk about the data yet and you will hear much more about Telaprevir in both treatment naive and treatment failure patients in the coming weeks. What I will therefore do is spend a little time talking about our registration trials and our stat C combination plans.

The Telaprevir Phase III program is advancing with an outcome that we hope will result in a strong product profile for treatment naive and treatment failure patients. The majority of treatment naive patients in our Phase III registration program are now in the post-treatment follow-up phase or beyond. We expect to have FBR data from Advance and ILLUMINATE in treatment naive patients in the first half of 2010 and from the realize study in treatment failure patients in mid 2010.

Turning to our Stat C combination plans, we are concluding the three day wild kinetic study evaluating four different doses of VX-222 as a monotherapy, we initiated a drug-to-drug interaction study with Telaprevir in the third quarter. Depending on our discussions with regulatory authorities and on data from these trials, we are planning to initiate the first combination study in patients with Telaprevir as early as the end of this year. This could put us in a position to have proof of concept data with the Telaprevir VX-222 combination by mid 2010.

In regards to the CMC, means chemistry manufacturing (inaudible) part of Telaprevir development, today, actually we are producing commercial inventory. We are manufacturing a metric ton scale. We have run all the registration validation campaigns of Telaprevir API, which is the active pharmaceutical ingredient and drug product and are preparing for our packaging campaigns to go forward. Everything is aligned with our commercial launch timelines at this time. The commercial product we are manufacturing is actually the same as the product we are using in the Phase III program. J&J also has put in place a supply chain to meet their territory, which also will provide a back up supply chain for us in North America if required. In Summary, with the data we have to date, we have begun to prepare the NDA documents for Telaprevir and expect to have data from our Phase III program and CMC package complete for the NDA submission in the second half of 2010.

Before I close, I'd like to highlight also VX-549, our selective inhibitor of JAK3. We announced last month we expect to advance VX-509 into a proof of concept trial into the first quarter of 2010. It will be a top of line, randomized placebo control trial. The key focus will be on safety, tolerability, and clinical activity. We anticipate dosing for 12 weeks compared to placebo. Also, we will announce the design of the study at the time of initiation we are planning to measure ACR20s, 50s and 70s as indicators of clinical benefit and obviously the safety profile will be very important. In Summary we have made significant progress since the start of the year by achieving critical milestones according to our set timelines in both HCV and CF registration programs and we continue on track as we move closer to potential regulatory submissions in two major diseases. I will now turn the call over to Matt.

Thanks, Peter. As you have just heard from Ian and Peter, we are continuing our work towards building a fully capable biopharmaceutical Company. We're keeping a keen eye on our cash position while we invest in development opportunities and maintain our discovery activities that are ongoing. Today, we have two late stage programs in HCV and CF and we have the potential to gain data from several proof of concept studies that represent future growth potentials in 2010. In building the Company we need to be very thoughtful as we evaluate each program and launch a compound. We will target serious diseases with potentially transformative therapies. We believe we are in a strong position with the product profile we have shown to date for Telaprevir. We could have the first compound to address the unmet need of the treatment failure population and also the first twice daily Stat C agent to treat HCV. We are focused on the completion of the Telaprevir Phase III registration program and are on track to submit an NDA in the second half of next year.

In Telaprevir, we think we are in the right place at the right time heading into 2010 and we are well positioned in working towards addressing the treatment needs of HCV patients and the increasing number of patients that are looking for new treatment options. We see opportunities to sustain leadership in HCV well into the future as treatment evolves. That's why we're also focusing on initiating combination treatment with Telaprevir in our VX-222. We are also focused on building the commercial infrastructure that enables us to develop the market and establish market leadership. I enjoy connecting with the commercial end of the business. It's an area I know well and the potential to launch Telaprevir and build a highly effective and focused salesforce is what I'm most excited about today. In addition to the salesforce we are focused on bringing in an internal commercial talent to the Company including a new Chief Commercial Officer.

The ability to discover and subsequently develop important medicines is the basis of our business and in addition to Telaprevir, we have another opportunity with our Cystic Fibrosis program. There is no therapy right now to address the underlying defective protein responsible for Cystic Fibrosis. Having previously worked in the specialty pharmaceutical market area, I recognize that VX-770 and VX-809 have opened the door to potentially address another significant unmet need and help grow our Company. In building Vertex, I'm working with Peter, Ian and others to strike the right balance between disease areas where we believe we can make the most impact with development of important molecules while at the same time funding our business and managing our capital structure through to positive cash flow. To me, this is exciting and it's the fun I love. I believe we have the effective strategy in place. We are executing on all aspects of the business and importantly we have the time to complete our build prior to launch of Telaprevir.

In Summary, I think we're in a great position. This is a rewarding business and I thank you and look forward to seeing a number of you at ASLD next week. Michael, back to you.

Thanks, Matt. We will now open the call to your questions.

(Operator Instructions). We'll go first to Rachel McMinn with Banc of America Merrill Lynch.

You've mentioned the data from combination studies for Telaprevir and 222 could be available by mid 2010. I know you're not prepared to talk about specifics of the trial design there but what kind of data are you talking about? Is this RVR data and then secondly, are regulators requiring any type of combination animal tox data prior to starting these studies and if so do you have that data?

Thanks, Rachel, it's Ian. Maybe I'll take, it sounds more like a disclosure. I'll let Peter give you some background on how we're thinking about the trial and the second question of the tox data, but by mid 2010 given the trial we're currently contemplating and discussing with the regulatory authorities we will have, we should have interim data that will give us an understanding of the viral kinetics and also when we say viral kinetics not just maybe the log drops but also whether we have viral breakthrough over a duration for the study.

We need to understand what kind of duration we can conduct this study as we think about the study it will be all different forms of combination with Telaprevir and 222 and it will include with and without Ribovirin, and we hope to have data mid 2010 specifically on the viral kinetics and breakthrough and initial safety profile.

So in terms of the tox studies and regulatory requirements around those, what's important to understand is we have already a complete safety package for Telaprevir and over 2500 patients included, I think we should first of all mention that and secondly we have completed 12 week non-clinical tox studies with VX-222 that would allow us to at least go in a three-month regimen. Now, in terms of requirements, given the latest movement, what is required for the agencies is that you have at least for each of your experimental drugs, which Telaprevir is not really seen as that any longer but in general, a 12 week type of tox study, and then you can move forward, what they step away from and make it a little easier in these early more experimental phases is that you don't have to provide a combination tox study with both compounds and animals provided up front, so we are in discussions with regulatory agencies as we speak and we will keep you updated as soon as we get feedback and can talk about it.

Okay, well then just to close the loop there what is the gating factor to starting that study?

Gating factor?

Feedback from the regulatory authorities, it has to move ahead with the trial design we've currently submitted. You should see more clarity on the trial design and the start of the study towards the end of this year, so the next couple months.

Perfect. Thanks very much.

Yes.

We'll go next to Geoffrey Porges with Sanford Bernstein.

Thanks very much. Just to probe a little bit more on that trial first, Peter, can you give us a sense from your comments, should we assume that you will be able to have at least one arm of just 222 and Telaprevir without co-administration of interferon and/or Ribovirin or post subsequent administration of Ribovirin, and a question for Matt as well. Could you talk a little bit more about filling out your Management team, what we should anticipate there in terms of beefing the Company up to prepare to become commercial? Thanks.

Thanks, Geoff, for the question. I think as you can imagine theoretically, we plan for such a thing but I think it's all inching on discussions that are constantly ongoing with regulatory agencies in the world, so if everything comes down the way we want to we will have such an arm.

Okay, thanks.

Okay, Geoff, and as far as your question regarding filling out the commercial, obviously I have a tight time frame. I think we can work within. I've had in excess of 37 unsolicited offers of interest in that Chief commercial job and we've got another eight or so from our recruiters so I think that that's going to be selection from a very high caliber list of people and I'd like to have it done by year-end and then at the same time we are continuing our search for the Head of Sales and I can tell you I've had a pretty in depth review over the last couple of weeks hereof where we stand with everything. We are in great shape.

A lot of companies don't start commercial buildout until a year prior to launch and we started as you know three years. I think our strategy is solid and in place and it's a matter of getting that Chief Commercial Officer in place but mostly it comes to the sales implementation side, a place where I'm very comfortable. I've literally built four or five from scratch in my career and we're in great shape. Our's is a little bit configured differently but nothing that challenging as far as getting interested people and the Company is pretty well known right now. We're having a lot of interest by people all over the industry and some of the very best people. I think people would be surprised who applies for jobs sometimes it's amazing to look at the list of whose who, so we're in good shape.

Okay, thanks very much.

Our next question comes from Ted Tenthoff with Piper Jaffrey.

Great. Thank you very much for taking the question. Two quick ones sticking with the HCV side for now. What are your thoughts about potentially doing studies in combination with EPO either prior to just to explore the impact there and whether or not the FDA may require that and then what can you tell us about the new MS5 A compound and when should that go into the clinic?

So at this given point in time as you know our Phase III study with EPO is to have a label and we have no plans right now to engage in any EPO driven trials.

I think for the 5 A program?

Well, the 5 A program we have is in pre-clinical stage as you know, and my hope is that in the course of the first half of 2010, we can report more about the start of the pre-clinical Development.

Great, and then is there a chance we'll get pre-clinical data at EPO next year?

For 5 A?

Yes.

It's probably too early.

Excellent, thank you.

We'll go next to Geoff Meacham with JPMorgan.

Thanks for taking the question. The question for you on 208. Any updates on the regulatory strategy there? I know you guys have talked in the past about doing a pKa study to support labeling but I'm wondering if you can rule out having to do a formal 48 week TID versus BID study at this point.

Yeah, so there is a huge variety of options that you can consider, so we believe that Telaprevir has the potential to be dosed twice a day. We are working with people now to basically figure out what the right strategy is. In the most extreme case, you could anticipate a request from regulatory agencies to have another say 600 to 800 patient study and that is the most extreme on the one end. The other one will be on the other end that you can have a strategy around let's say draft level discussions and PKPD arguments which also have been applied in former years in different indications like HIV, which also could give you a nice way into it to not have to do a lot of studies in terms of everything in between so we are currently preparing for a dialogue with the agencies and we will come back to it when we know what the response is.

Got it, and any guess as to which one at this point feels more likely on the strength of the 208 data?

I think nobody knows what it will do.

And last question, for the NDA, you'll have obviously well over 2000 patients and have you ever had a discussion with FDA with respect to an expanded access program prior to approval and what would be the consideration there?

So far we didn't.

Okay. Thanks.

We'll go next to Michael Aberman with Credit Suisse.

Also turned to C208 you mentioned in the Press Release and again on the call about this being the first time that we'll see data with the response driven protocol that you're using in the Phase III. Can you help us understand why you think that's important in terms of what our expectation should be and how that is compared to the earlier trials that you had, and also we've seen differences between the interferons presumably there's different interferons in this trial as well, how should we be thinking -- as we head into ASLD, how should we be thinking about the results in relation to the different interferons as well as looking at BID versus TID?

So Michael I'm going to take the first part of the question, which is because we are using this phrase response guided therapy, so I just want to explain what we mean by that and then Peter can help you understand a little bit further about how we're conducting the Phase IIIs and the outcomes that we're hoping may result from the protocol that we set for Phase III.

So, when we talk about response guided therapy we're trying to help people understand the results that we've shown so far in our Phase II program was not under a response guided regimen and what we mean by that is there is a number of patients that don't achieve an RVR. If you don't achieve an RVR, then you did not stay on six-month therapy, you actually went to 48 weeks of the regimen and those patients may have achieved an SVR; however the SVRs that we've actually shown in the past were actually only for those patients that achieved RVR in PROVE I study so as we think about response guided therapy and the protocol that we're using in Phase III, we are giving patients, non-RVR patients, a chance to achieve an SVR in the Phase III protocol, so we are trying to make that distinction that that is the Phase III protocol and we're hopeful that it may achieve better outcomes than what we saw in the Phase II program. Now I'll hand it over to Peter as we think about more broadly the Phase III protocol design.

Well, there's not a lot more to be added other than you have here clear end roads to keep more patients in a situation that they might achieve SVR, that's number one, and the other thing is that you could work half of your statement in terms of data that gives you a chance to make a decision whether a person has to stay on 24 weeks on a regimen and I think chances are that you will find that the majority of patients will benefit from a shorter regimen and I think that's part of the strategy sign that gives you basically this option.

Thanks.

We'll take our next question from Yaron Werber with Citigroup.

Thanks for taking the question. Ian and Matt, it's a question for you. Maybe -- I know you've not given guidance for next year, but just maybe help us understand a little bit your R&D plans because on the one hand, the fairly sizeable Telaprevir Phase III program is going to end, but on the other hand it sounds like you're ramping up your CF program and my understanding is the cost per patient is a little bit higher, there are fewer patients but still the cost is going to be higher and you're also taking a BID program potentially forward. There's a great pipeline here, but just help us understand, should we think of R&D as being flat next year or should we think of R&D maybe even going up next year or are we thinking about this the right way?

Yaron, thanks for the question, so I'm firstly going to start by saying I can't answer your question directly because I'd be giving guidance about 2010 and we're actually in the midst of our planning cycle for 2010, so I can't give you the specific answer to your question. However, I can understand you -- help you understand how we're thinking about R&D investments next year in terms of the critical programs and what are we trying to achieve with our R&D investment. So number one, with research, for the last few years we've run research investments to relatively constant level and that will continue into 2010 and secondly as we looked at the two key areas -- two key disease areas we have HCV, which you're correct will be hopefully concluding our registration program, but we are hopeful that we will be expanding on our combination, Stat C combination program so as one comes down there's one that will increase. I don't want to give the relative numbers but there is an expanded effort with the Stat C combination programs

And then into Cystic Fibrosis, in 2009 we've been predominantly focused on a small scale Phase II program with VX-809 the corrector compound and the registration study for VX-770, and as we look into 2010, VX-770 should be going along full steam and this year it's just been starting up and 809 we're hopeful it will come to the conclusion, but we're hopeful that we get a good result of the 809 study which then allows us to progress into combination therapy within the Cystic Fibrosis portfolio. Those are the two areas of thrust in the HCV and Cystic Fibrosis and then we have, as we've mentioned earlier, we have a Phase II program that we want to run with our JAK3 inhibitor so that will be running along and then we have some earlier stage efforts, the research output continues to be strong and we think we'll have preclinical and nearly clinical work on compounds that continue to come out of our own research.

Fair enough and maybe just a follow on for Peter and let's assume it sounds like the BID data is going to look good with Telaprevir. Can you clarify is there any chance that you actually are going to move to Stat C combo studies with 222 using Telaprevir BID or would you want to keep it TID just because that was how the approval was going to happen?

Well, so I think this is something we would like to debate after ASLD, when you have seen all of the data.

Great. Thank you.

The next is Steve Harr with Morgan Stanley.

Just a quick question on the second generation protease inhibitors. We've been -- they've kind of been in Phase I for a while and just want a little update on where they are and when we might see data.

Okay, so Steve, basically we are talking about two compounds VX-995 and VX-813 and our belief is in terms of prioritization, we have to basically put more emphasis on 222 right now, however, I think we will come to a conclusion with those two molecules somehow in the middle of next year or so. This is approximately when we have enough biokinetic data and other types of things that gives us a solid foundation to make the best position about what to keep in the portfolio and what not and what to mix with what and those types of things, so middle of next year is probably a good time to talk about those. It's still ongoing.

And what is exactly you're looking for in the profile? Is it side effect profile, dosing profile, resistance profile? What will make you go forward here?

So first of all you have to understand Telaprevir has really set a super high bar. It's very hard to beat that and so because of that I think what you have to understand is the second generation molecules are more molecules seen maybe in a different light and that's the light of combination therapy and going forward and whether they have the right features PK wise, metabolism wise (inaudible) from an efficacy and potency point of view that they can fulfill those. The other thing is if you have something like that, that is clean and edible, then you can also go in different markets that we currently have some restrictions being partnered with J&J and Mitsubishi.

Thanks.

We'll go next to Phil Nadeau with Cowen & Company.

Good evening. Thanks for taking my question. It's also on the C208 trial. Could you give us some idea of what your current thinking is and how much efficacy the FDA would be willing to give up for safety? So what kind of detriment in SVR rates between twice daily and three times daily would begin to cause a problem for the twice daily regimen in your current opinion?

It's Ian. Excuse me, thanks for the question. So with those being four or five days before ASLD, any questions relating to C208 we look forward to answering those on, well I guess after the embargo, which is 5:30, I would be happy to take your questions regarding 208 and how we proceed forward and we would be happy to see you on Sunday night where we're going to have an investor presentation where we'll cover the data in depth. In terms of answering questions that feel, to be honest as though they feel they are kind of reversing into how do you feel about the results we would rather take those at ASLD later this week.

Fair enough, and Ian just a financial question for you. In the $17 million in the collaborative R&D revenue line, were the Mitsubishi payments amortized in that or are those amortizations just going to start in future quarters?

Mitsubishi is in the September quarter numbers. I can't remember the precise date that we completed the transaction but there was some monetization of the Mitsubishi numbers. When we file our 10-Q, there is a break out of revenue from the contributing partners so you will be able to see the the contribution on the 10-Q when we file it.

We'll go next to Howard Liang with Leerink Swann.

Thanks very much. I have two questions regarding the CF program. Now that the strive trial is expected to complete enrollment in the first quarter do you have a better idea of the filing timeline for 770 and my question is also -- Envision, wouldn't Envision be needed for filing and approval and have you completed part one of Envision?

So in terms of the filing timelines, I think we cannot make any definite answers right now as it needs to be debated with regulatory agencies because you have different scenarios, a 24 week scenario versus a 48 week scenario, and at this point in time it's unclear what different agencies in the world will basically allow for it and it might not be even the same outcome in different agencies, so it's a little too early to make any predictions there, so the other part of your question please?

Is Envision needed for filing and have you completed Part I of Envision?

I think yes it is needed because of what the agency wants is a broader picture about the use of VX-770 in different mutations and age-groups and so you have to basically do that.

So Phil, just to the question, is it required for the 6-11 year old in the 551 mutation?

That's what I mean with the age-groups. You have to, because everybody knows in the CF program, I think the most benefit you can achieve is when you dose as early as possible and therefore, I think there's a high level of interest to basically see data in six year olds and older to be at least able to address those patient populations that have the best, at least relatively speaking, the best chance to benefit from the drug regimen.

Have you completed the single dose PK study for Envision?

In New York we talked about being in that part.

We are in the midst of the study.

Okay, great. Thanks very much.

We'll go next to Maged Shenouda with UBS.

Sure, hi, thanks for taking my question. Most of the questions have been answered, but maybe you can just discuss your current thinking about salesforce side and commercial infrastructure and then also, since Hepatitis C landscape is changing so quickly with so many products in development, what are you currently thinking about our post-commercialization support, clinical trial support, and how is that going to factor into expenses?

I'll take the first part and I'll ask Peter for the second part. It's a relatively targeted market, in fact very targeted for the size of it. We know where we've done a lot of segmentation work in terms of where we need to focus both personal and non-personal promotion and I'd say from an infrastructure you're looking at 200 to 250 people including the salesforce which is very efficient given the size of the market and number two, in terms of segmentation there's different players here. We have a government focus to try to get HCV better diagnosed and treatment recommendations which are not there now, which could be a huge impact, so there's a promotional activity or you can call it lobbying or whatever you want to call it, but basically it's unbelievable this is four times as prevalent as AIDS and we have this little recognition of diagnosis and treatment. It's just really something that gets anybody's attention when we show them the data.

So small commercial infrastructure, some different types of players, it's not all about rattling the cages of treaters although we will see them. It's also about finding patients, getting patients treated, getting the therapy paid for and changing the push from the government as far as the importance of this disease in terms of the way the CDC views it, so it's small, it's focused, it's multi-segment and it's aimed at getting that 2/3 of people that don't know they have the disease treated and the other part is fairly obvious. The first part of this is people that have failed treatment or are awaiting for the new products to treat them faster and at a higher SVR rate so we have all those segments. We have people that are going to address those segments and all we have to do now is put the infrastructure in place. Peter did you want to comment on any post marketing studies? Exactly can you clarify that question?

Well I'm just thinking, most products need a lot of post marketing clinical trial support and have you started thinking through how you're going to move in that direction?

So absolutely we have a strategy as you well note, there is different patient populations that need to be addressed and going forward, so co-effective patients for example, HIV, HCV or HPV, it might be the HCV population and there is also life cycle management in terms of tablet formulation and other types of things that we are considering and all those types of things, so yes, we have a well thought out strategy in place and we'll act on that. And then at the end of the day obviously the Stat C program which is basically the biggest way forward, because that might change and revolutionize if it works the landscape substantially and what gives Telaprevir and the entire HCV treatment regimen a long duration on sustainability on the market.

Thank you.

We'll go next to Terence Flynn with Lazard Capital Markets.

Just two questions on the Telaprevir 222 combo trial. I'm just wondering first what geography that you guys were planning on running that study in.

So probably a lot of you struggling through some certain viruses at this time of year. So we're not being specific on the geographies right now. We can tell you that we're in discussion in parallel with a number of regulatory authorities and we're hopeful it will proceed ahead before the end of this year. Clearly, the intent is to also be in Europe and the US at some point with this initial combination study and that is our intent. Let's see how those discussions go but we're still on track to commence this study before the end of this year.

And then the second question is, just can you remind us the root of metabolism for Telaprevir and 222?

So the root of metabolism, that's a good question. That's why we actually picked those two compounds and selected 222 because what you have to do is find a metabolism that is not interfering negatively with each other if you combine two molecules, so Telaprevir is mainly metabolized by the (inaudible) that means 384 is the main metabolism P450 enzyme, whereas 222 is mainly metabolized by elimination by the bile and the kidney and so I think that is the nice thing here that you have basically a complimentary metabolism that doesn't lead to induction which often is a drug interaction problem. That's basically what it is.

Okay, thanks a lot.

We'll go next to Tom Russo with Robert W Baird.

At CF, you started wetting appetites for other class four and five populations besides 551 D where 770 might work by itself and I was wondering if we're at a point where you could start giving more detail around your plans there and timing for any results and regulatory strategy?

So obviously, yes, we can say something at least at this point in time. We haven't debated all those drugs with agencies at this point in time so you have to be a little patient until we have but from a strategic point of view, we have about 1600 mutations as you know and what the strategy is is to basically go in all those mutations that have at least a considerable number of patients available that you can have a clinical trial done with because if you have only two patients in the world it's a little hard so what the idea is to basically not just go for the Class IV and V mutations but also go for Class II mutations and means those of 508 -- homozygotes and heterozygotes and to get a complete picture about the main mutations that are available to make the argument regulatory wise that you can do a leap of faith that it also might work in other mutations that you never can test.

Okay, and then with regard to the PROVE III, the data we're going to see at the meeting this weekend, besides the reassurance there's no late relapse, is there any regulatory significance to the SCR 48 data? Does that have any, was that recently submitted to the agency and is there are any kind of impact from that?

So we continue to follow patients post-SVR 24 at the request of the agency and we continue to measure those patients. Additionally on PROVE III, we followed them through effectively an SBR 48 and we want to provide that data at ASLD just for confirmation of the good results that you once saw back in PROVE III earlier this year.

Okay, thanks.

We'll go next to Davis Bu with Goldman Sachs.

Thank you for taking the questions. The first, most of my questions have been asked but on 222, so you'll complete the three day and the drug interaction study. Is that something that we'll see the data for this year or at a future conference? I was just wondering what the disclosure around that might be.

In terms of disclosure, David, thanks for the question. We'll provide you the data on 222 dose ranging and DDI, maybe the data on the DDI study, but certainly the dose ranging study for 222 when we're closer to providing with an update on our strategy to do the study. We hope that will be before the end of this year so we'll be back to you with that data at that time.

Thanks, and just want to also clarify with regard to the response guided results for C208, without sort of discussing the results, I was just wondering, are we going to be able to see what the results would have been without the response guided therapy to create more of an apples-to-apples comparison to PROVE I and PROVE II?

You're asking a very detailed question. I think you should talk to the investigator and they will help you understand it.

Sure, thanks.

We'll go next to Jason Zhang with BMO Capital Markets.

Thanks, I wanted to go back to the combination study to the 2 and the Telaprevir. I think the gated sciences, they said that EMEA has new documents requesting three months combination tox data before actual study in humans and I'm wondering whether it's a similar requirement from the FDA or if there are requirements by the US that you're confident going into the combination study by the end of the year. Do you have that data already or not?

There might be two comments to be made. First of all I think we are not comparing apples and apples. The Gilia compound and whatever they want to mix it with are experimental molecules that have -- that are looked at in regulatory agencies across the world with different eyes and when you have a compound that's basically completed Phase III from a dose regimen you are playing in a different ballpark so rules are not exactly the same so that's the number one thing and now for the second point, with the EMEA, it is true that Europe has a different view on what you have to provide to a certain extent than the FDA. The FDA lately that is really lately means a couple months ago started announcing at different meetings where they presented that they ease up the way into combination trials by not requiring the combination tox right up front. Doesn't mean that you never have to do that. You have to provide a three-month toxicology package for each of the compounds that you want to combine, that's number one, and then to do the combo Tox as you go forward, this is just to give you a small number of patients a great range of a potential proof of concept.

Very well thank you. And also another question is, for the pivotal trial that the two pivotal trials in both naive and the failure population, I guess before next years easel, you should have complete dosing for all the patients including the backbone therapy. Is it possible you will be presenting just the safety data at the medical meetings or you don't think you'll present that data at all before you submit it to the FDA?

There's data at the future conference, always like to provide safety and benefits in combination, so it's unlikely we're going to carve out just safety information, as we wouldn't carve out just efficacy information, so we like to give a balance of information, so presented at an appropriate medical conference and there may be a top line that comes before that as we do in certain cases.

Certainly not at ASLD?

Not at ASLD regarding 222. Too early.

Okay.

You mean data in a couple days? No.

Okay, thank you.

We'll go next to Brian Abrahams with Oppenheimer & Company.

Just wanted to follow-up on the safety profile for 222. I think at easel you had reported a couple of mild side effects for the initial multi-full dose studies, but nothing drug related, just wondering, now that we've further explored the doses up and down and conducted part of the drug interaction study, what's your level of confidence in the safety of the agent and secondarily, where do you stand to potentially pursue a parallel path as a standalone agent plus peg and Ribovirin not in combination with Telaprevir?

So in terms of the confidence, the confidence is high and remains high as it was when I presented to you about earlier pre-clinical data in New York and whatever the spring time frame, so I think there's no severe adverse effects that we have to report so far and it at least gives me a good feeling that we are on a solid track. That's in terms of safety. In terms of thinking about 222 as a baseline therapy in combination with Ribovirin and pegylated interferon, yes we are thinking about that as a potential and we will let you know when we know more about how we're going to do it.

So your sense is that those initial signals were, from the multiple dose study, were probably just noise?

So we're not sure what you're talking about with the initial signals Brian, but more broadly, we're on track to commence this combination study before the end of the year and we're looking forward to giving you the aspects of the trial design and we're currently in discussion with the regulatory authorities. I'm hopeful that that helps you understand our confidence towards initiating this trial, as you referred to specific concerns we're not actually aware of those.

Okay, fair enough, thank you.

We'll go next to Alan Carr with Needham & Company.

Hi, good afternoon everyone. Thanks for taking my question. Follow-up on 770 trials. Looks like you've got a pretty good sense for the first trial that it will finish enrollment in the first quarter of 2010, so do you have a sense of when the second and third one might finish enrolling and the other part to this question is in terms of announcing results, will you announce results after 24 weeks at the end of the, when you have the efficacy end point or will you wait until the full 48 weeks when you finish the safety component?

So in terms of let's say data announcement, Ian will say something. I have answered the first part of your question which is do we have a feeling how enrollment will come down and when it will be done, so the answer is enrollment in those trials, even so very much appreciated by patients and doctors equally, is hard to predict because it's a difficult patient population and I think that it's not a linear process so I think we cannot necessarily even though it's currently going very well necessarily conclude that it goes all the way down. It might, might not, so I think it's very difficult to predict that. This is what it is.

And Brian thanks for the question. Given that we've recently tonight we're announcing the completion of enrollment, then the progress for enrollment for 809 and then also the progress for enrollment for 770, we anticipate, we're still guiding to announcing data from the 48 week end point from that study which would take us into the beginning of 2012, the first half of 2012. We actually don't want to move off that at this point, as Peter mentioned earlier on this call to provide data an earlier point because as you're aware there is a week 24 interim look for efficacy. Pending the data we get at that point and the discussions we then have with regulatory authorities, there may be an early opportunity to provide data to yourself and if not the study will remain blinded through the week 48 analysis period which takes us into the first half of 2012.

Okay, thanks very much.

We'll go next to Brian Skorney with ThinkEquity.

Yes guys. Thanks for taking the call. One real quick question, when we're looking kind of to the future of combination Stat C therapy, [Gil] had on their call last week indicated that they maybe looking to move both of their experimental drugs into one Phase III trial as a combination rather than getting each one approved separately and I was wondering what your take is as far as moving Telaprevir in combination with the ViroChem molecule forward, obviously Telaprevir will get on the market as Stat C plus standard of care, but would you anticipate having to do a similar trial for 222 or do you think that after some level of Phase II data you can just move right into a pivotal Phase III combining the two?

So I think nobody knows what the world will bring, but I think likely given previous experiences is I think we have not to do a complete development of 222 with all Phase III data and whatever have you. I think you can do if you have one (inaudible) drug out there or even if you are late like we are in the late stage phases, you can add in other components and if 2 A data are convincing it's all a data driven discussion. They will allow you to continue this type of combination going forward. So we have not to do a separate 222 developmental all the way through and then combine.

Great. Thank you.

Yes.

We'll go next to Katherine Su with Wedbush Securities.

Hi, good afternoon. You said you have the 12 week animal tox data for 222 already. Would you mind commenting on that? Any signals seen at all?

Katherine, actually, we provided a lot of the pre-clinical tox information earlier this year back in the spring on 222, which was effectively we've done two species and we didn't find anything that would concern us and we've advanced into a dose ranging study. I'll be happy to get you that data in detail that we provided to folks back in the spring and suggest contact Michael Partridge prior to the call.

Okay, great. Thanks for that and another question is more of a general strategy kind of question. What do you think of the approach of having a Nuc in the combination apparently due to the high genetic barrier to resistance and also [pendiotific] activity versus [urotrodes] in the combination of a PI in a non-Nuc?

Okay, so this is an interesting story that is somehow cruising around in the outer world, so I think theoretically speaking, you can add everything to a combination including a Nuc. Now I think I want to say something about resistance pressure. I think the argument that a Nuc is better because you have a different resistance pressure as compared to non-Nuc is in a way a mute point and the reason why I'm saying that is because it pumps out preclinical data, invitro data available right now that show that variance that are produced by one inhibition mechanism gets taken care of if you combine it by the other product that is compliant to the mix and so for example, variant produced by Telaprevir gets taken care of, of 222 and vice versa and what that means is at the end of the day that the entire resistance argument is sort of I would say less of a problem, so I think this is the first thing I want to say.

And the second thing I want to say is, in my life at least and this is happening in the virology field for quite a while, most Nucs, and it's not necessarily always the case, but most Nucs are more difficult to deal with because of one simple reason and that basically they act in the active side of polymerase which is the most conserved active side in the system on the planet and that means the activity is a big issue and polymerase is all over the body in the gut, in the heart, in the eye, everywhere and chances are you'll see more side effects and that's what you're seeing and that's why a lot of those Nucs are never saw the light of the day and there's one or the other and so yes, there is a potential but I would say the resistance argument is sort of a mute point, and then it comes down to safety and I think the non-Nucs are better and any other mechanisms might be better, so therefore I'm not a big fan but it is a do-able thing and if somebody will give me tomorrow a Nuc that is clean I would maybe try it but I haven't seen one.

Thanks.

That's all the questions that we do have. I'd like to turn the call back over to Management for any additional or closing remarks.

Thanks, we appreciate everyone for joining us. We will be in the office for a few more hours if anybody has follow-up questions and we certainly look forward to seeing you at ASLD this Sunday. Thanks a lot.

That does conclude today's conference. Thank you for your participation.