Anadys Pharmaceuticals, Inc. Q3 2008 Earnings Call Transcript

Anadys Pharmaceuticals, Inc. (ANDS)

Q3 2008 Earnings Call Transcript

October 23, 2008, 5:00 pm ET

Executives

Elizabeth Reed – VP of Legal Affairs and Corporate Secretary

Steve Worland – President and Chief Executive Officer

Jim Glover – SVP of Operations and CFO

Jim Freddo – SVP of Drug Development and Chief Medical Officer

Analysts

Ted Tenthoff – Piper Jaffray

Liisa Bayko – JMP Securities

Eric Schmidt – Cowen

Jake Ono [ph] – SFG

Presentation

Operator

Good afternoon, ladies and gentlemen, Anadys Pharmaceuticals’ third quarter 2008 conference call. My name is Melanie and I’ll be your coordinator for today. I would now like to turn the call over to Elizabeth Reed, Anadys’ Vice President of Legal Affairs and Corporate Secretary. Please proceed.

Elizabeth Reed

Good afternoon and thank you for joining us. On behalf of Anadys Pharmaceuticals, I would like to thank everyone to our conference call for the third quarter ended September 30, 2008. I hope you’ve all had a chance to review today’s press release. If you have not and you need a copy, you can visit our website at www.anadyspharma.com.

Before we get started, I would like to call your attention to the Safe Harbor Statement. This conference call and webcast contain certain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include but are not limited to references to future development plans for ANA598 and ANA773, including the occurrence, pace, timing and design of clinical trials and other development activities, as well as the company’s projected cash utilization for 2008.

More specifically, forward-looking statements include the company’s expected timing for and ability to achieve its projected milestone events, including commencing dosing HCV-infected patients in the ANA598 and ANA773 programs, the expected timing for obtaining viral load data from both programs and expectations regarding such data, and the ability to transition the company’s clinical program into Phase II studies during 2009.

Forward-looking statements also include references to the company’s beliefs regarding the expected future clinical attributes of ANA598 based on preclinical and early clinical results, including the potency, tolerability profile, oral bioavailability, antiviral effect and potential for combining ANA598 with multiple other anti-HCV agents; the expected benefits of accelerating certain ANA598 development activities, expectations about the future treatment landscape for HCV and ANA598 and ANA773’s potential role in that treatment landscape; the belief that the TLR7 mechanism will potentially be complementary to ANA598, as well as the belief that TLR7 agonist offer therapeutic potential for HCV and cancer; the belief that ANA773 can elicit immune stimulation of a magnitude sufficient to confer antiviral effects in HCV patients and the ability to achieve such antiviral effects at doses that are safe and well-tolerated. Forward-looking statements also include the company’s plans and prospects regarding potential partnering activity around ANA598 and the timing and occurrence of any future collaboration.

Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ, perhaps materially, from those anticipated or suggested by such forward-looking statements. For example, results of preclinical and early clinical studies may not be predictive of future results; and Anadys cannot provide any assurances that ANA598 and ANA773 will not have unforeseen safety issues, will have favorable results in future clinical trials, or will receive regulatory approval. In addition, Anadys’ results may be affected by risks associated with clinical trials and regulatory approval, Anadys’ effectiveness at managing its financial resources, its ability to enter into future collaborations, the scope and validity of patent protection, the ability to obtain additional funding to support operations, as well as competition from other biotechnology and pharmaceutical companies. These and other risk factors are discussed in more detail on our SEC filings, including our Form 10-K for the year ended December 31, 2007 and our most recent Form 10-Q.

With that said, I’d like to introduce the members of our management team who will be speaking today. With us are Steve Worland, Ph.D., President and Chief Executive Officer; Jim Glover, Senior Vice President – Operations and Chief Financial Officer; and Jim Freddo, M.D., our Senior Vice President, Drug Development, and Chief Medical Officer. First, Steve Worland will provide a brief introduction. Jim Glover will summarize our third quarter 2008 financial results, then Jim Freddo will review the status of ANA598 and ANA773. Following your questions, Steve Worland will wrap up the call. At this time, I would like to turn the call over to Steve.

Steve Worland

Thank you, Elizabeth, and thank you everyone for joining us this afternoon. In the third quarter, we made progress on all aspects of our pre-development programs. Our two hepatitis C programs have continued to meet aggressive timelines and continued to demonstrate favorable results. Very shortly, we expect to begin dosing HCV patients in the Phase Ib study of ANA598, our non-nucleoside polymerase inhibitor. As Jim Freddo will review for you in a moment, the safety and PK data for ANA598 in healthy volunteers is very encouraging and leads us to be optimistic regarding the viral load data we expect to report for ANA598 in the first quarter of 2009.

With ANA773, our oral TLR7 agonist prodrug, we’ve demonstrated immunological activity in healthy volunteers. We expect to begin dosing HCV patients in Part B of an ongoing study shortly, leading to a complete data set in the second quarter of 2009 and a likely look at viral load data from the first cohort in the first quarter of next year. We are developing both ANA598 and ANA773 to fit into the emerging new paradigm for HCV treatment. It is clear from data with leading protease inhibitors that addition of direct antivirals to current standard of care can improve clinical outcomes.

With ANA598, we are pursuing an opportunity to further improve outcomes with inclusion of a second antiviral and a treatment regimen, or to eliminate interferon or ribavirin through the use of two or more direct antivirals in combination. With ANA773, we are pursuing an alternative approach to replace injectable interferon in hepatitis C treatment. Through activation of TLR7 with an oral drug, we hope to induce interferon-dependents in our viral mechanisms but at lower systemic exposures to interferon, which may result in an improved side effect profile compared to current injectable interferon products.

With both hepatitis C programs, we remain on track to collect antiviral data in the next several months. Data that we believe will further establish to present both products to be included in future hepatitis C treatment and that will provide the clinical basis to be ready for Phase II combination trials in mid-2009. We also remain excited about the opportunity for TLR7 agonist in oncology. Jim Freddo will provide an update on our oncology effort in addition to our HCV effort. But first, let me turn the call over to Jim Glover for our financial update.

Jim Glover

Thank you, Steve, and good afternoon everyone.

I’ll begin with the review of our third quarter 2008 financials and finish with our cash utilization outlook for the remainder of the year. Let me start with a reminder that our quarterly and year-to-date financial comparisons to last year may be less relevant due to the fact that the company had a termination of a prior collaboration and initiated a strategic restructuring in the third quarter of 2007. As a result of these actions, the company recognized approximately $21 million of previously deferred revenue from an upfront payment and a milestone payment and took a restructuring charge of approximately $1.2 million.

In the third quarter 2008, Anadys had no reported revenues compared to $21.5 million in revenue for the same period in 2007. The revenue recognized in third quarter 2007 was primarily derived from the recognition of previously deferred revenue. Operating expenses were $9.7 million for the quarter, compared to $10 million for the third quarter 2007. The net decrease in operating expenses quarter over quarter was a result of significant differences in spending patterns.

In the third quarter of 2008, we had lower overall operating costs resulting from our prior year restructuring, which was partially offset by a significant increase in development costs associated with ANA598. In the third quarter 2007, we had higher operating costs in the restructure charge offset by significantly lower ANA598 development cost. The development costs associated with the ANA773 programs were essentially flat quarter over quarter.

The company had a net loss of $9.3 million for the third quarter of 2008, compared to $12.3 million of net income for the same period in 2007. The basic and diluted net loss per common share was $0.32 for the third quarter of 2008, compared to $0.43 per share of net income in 2007. This net loss in the third quarter of 2008 primarily reflects the lack of collaboration of the revenues in 2008 and lower interest income.

For the nine months September 30, 2008, Anadys had no reported revenues, compared to $23.9 million in revenue for the same period in 2007. The majority of the revenue recognized on the first nine months of 2007 was primarily derived from the recognition of previously deferred revenue from our prior collaboration that was terminated.

Operating expenses were $25.2 million for the first nine months of 2008, compared to $20.1 million for the similar period in 2007. The net decrease in year-over-year operating expenses for the first nine months was a result of some significant differences in spending patterns. The first nine months of 2008, we had lower overall operating costs resulting from cost savings from our prior year restructure, which was partially offset by significant increase in development costs associated with the ANA598 and ANA773 programs. For the nine-month period 2007, we had higher operating costs in restructure charges offset by significantly lower ANA598 and ANA773 development costs.

The company had a net loss of $23.9 million for the first nine months ending September 30, 2008, compared to a net loss of $1.4 million for the same period in 2007. The basic and diluted net loss per common share was $0.83 for the first nine-month period ending September 30, 2008, compared to $0.05 per share net loss in 2007. The higher net loss in the nine months ended September 30, 2008 primarily reflects the lack of collaborations in 2008 and lower interest income.

The company had cash utilization of $7.8 million in the third quarter and $21.2 million for the nine-month period ended September 30, 2008. As of September 30, 2008, the company’s cash, cash equivalents, and securities available per sale at market totaled $34.4 million. We continue to project a year-end cash balance of between $25 million and $27 million.

I will now turn the call over to Jim Freddo to discuss ANA598 and ANA773. Jim?

Jim Freddo

Thank you, Jim. ANA598 is our non-nucleoside inhibitor of the hepatitis C virus polymerase. ANA598 was selected as a development candidate in mid-2007 based on several important properties, including inhibitory potency against genotype 1 replicon, favorable preclinical pharmacokinetics, early safety pharmacology testing, and in vivo tolerability.

The first-in-human study started in late May and dosing had been completed. This trial was designed to evaluate safety in pharmacokinetics in healthy volunteers, receiving single doses ranging from 400 mg to 3,000 mg. ANA598 was well tolerated in this study. It was well absorbed, and the human pharmacokinetic profile demonstrated sustained plasma levels of ANA598 with a half-life of 24 to 30 hours, consistent with the potential for once-daily or twice-daily oral dosing. All doses achieved plasma drug concentrations predicted to display substantial antiviral activity based on preclinical results.

Additional detail will be presented at the 59^th Annual Meeting of the American Association for the Study of Liver Diseases (AASLD), to be held in San Francisco from October 31^st to November 4^th.

The next clinical study for ANA598 will be the Phase Ib trial in patients with chronic HCV. This study will be conducted in several sites in the United States. Patient screening has begun, and we expect dosing to begin shortly. In this monotherapy study, naïve genotype 1 patients will receive ANA598 over three days at doses of 200 mg, 400 mg, or 800 mg given twice daily. Ten patients, genotype 1a and 1b, are planned to be enrolled in each of the three cohorts, eight on active treatment and two on placebo. We expect to have viral load data from all three cohorts in the first quarter of 2009 and may elect to explore other dose levels of ANA598 and/or once-daily dosing, depending on data from the first three cohorts.

Additional preclinical data will also be presented at the upcoming AASLD annual meeting. Anadys will present data showing that ANA598 exhibits a substantial antiviral effect against both genotype 1a and 1b virus in HCV-infected chimpanzees. In the second poster, we will present the results of in vitro studies that show ANA598 to be strongly synergistic with interferon-alpha. These studies also show that ANA598 retains activity against mutants known to confer resistance to other classes of direct antivirals, including protease inhibitors, nucleoside inhibitors, and non-nucleoside inhibitors that bind at the thumb site. In addition, genotypic mutations resistant to ANA598 will be presented and shown to be fully susceptible to interferon-alpha, a representative protease inhibitor and a representative nucleoside polymerase inhibitor. We believe that data confirms the broad potential for ANA598 to be used in combination with other anti-HCV agents from multiple distinct classes.

We previously stated our plan to accelerate certain key ANA598 development activities into 2008. Chronic toxicology studies were initiated in early September. These studies will give us longer-term safety data in animals and are expected to support clinical trials evaluating the combination of ANA598 with interferon and ribavirin. If ANA598 is successful in early stage clinical trial, it is anticipated that the acceleration of these non-clinical activities into 2008 will enable a more rapid and continuous development path into Phase II clinical trial in mid-2009.

Let me now turn to ANA773. As you all know, ANA773 is our TLR7 agonist prodrug that is in Phase I clinical trials. In July, we announced that Anadys was resuming clinical investigation of the TLR mechanism in HCV and had initiated a trial in the Netherlands to evaluate ANA773 in both healthy volunteers and HCV patients. We have recently completed dosing in the healthy volunteers in Part A of this Phase I trial. These subjects received a single dose, followed by four doses taken every other day at doses ranging from 200 mg to 1,600 mg. There were eight subjects at each dose level, with six receiving active drug and two receiving placebo. ANA773 was active in this study, with biomarker induction indicative of immune activation seen in the majority of subjects starting at 800 mg. No serious adverse events were reported. At the higher doses, in addition to biomarker induction, some subjects experienced side effects commonly seen with interferon, including fever and chills. One subject at 1,200 mg and two subjects at the 1,600 mg dose discontinued from the trial before completion of dosing. Although this data is preliminary, we are encouraged by the immunological activities that we’ve seen in this portion of the study.

We expect to initiate Part B of the study in HCV patients within the next few weeks. Patients in the first cohort will receive ANA773 800 mg every other day for 28 days. Doses for subsequent cohorts will be selected based on viral load and tolerability data from the 800-mg cohort. The primary objectives are to assess safety, tolerability, and viral load decline. We expect to have a complete data set in the second quarter of 2009, with an early look at viral load changes from the first cohort during the first quarter.

Now, let me turn to the ongoing Phase I oncology study for ANA773. We have completed enrolment of the third cohort of patients who are receiving 200 mg every other day. The patient enrolment in this study has increased since two additional sites were added in August. We expect to complete enrolment of the next cohort during the fourth quarter. The biomarker data indicative of immune activation seen in healthy volunteers receiving ANA773 on an every-other-day schedule is encouraging. We look forward to testing the clinical significance of this induction in patients with HCV and continue to believe that ANA773 also holds promise in the treatment of patients with cancer.

I will now turn the call back over to Steve. Steve?

Steve Worland

Thank you, Jim. Before we entertain questions, let me provide a brief summary and outline our expectations for the near-term, including the potential for a partnership around ANA598.

The pharmacokinetic data collected in our ANA598 healthy volunteer study is very encouraging. We obtained plasma drug levels predicted to show substantial antiviral activity, and we demonstrated a plasma half-life greater than 24 hours, consistent with once-daily or twice-daily dosing.

With ANA773, we have demonstrated immunological activity in healthy volunteers, consistent with activation of interferon-dependent pathways. In both programs, we are now screening HCV patients for enrolment in trials to determine the effect on viral load. In the ANA598 program, we expect to have complete viral load data from three cohorts in the first quarter of 2009.

In the ANA773 program, we will likely have a first look at viral load data in Q1 2009 and expect to have complete viral load data [ph] in the second quarter of 2009. For both programs, this data and the accompanying preclinical activity should enable us to pursue Phase II studies in May 2009.

Before we take questions, I’d like to comment on the status of partnering discussions for ANA598. While we can offer no assurances that we’ll enter into a partnership around ANA598, we are encouraged by the initial response from potential partners. As a reminder, we’ve previously communicated our desire to obtain viral load data prior to entering into a potential partnership around ANA598. Now, with the rapid progress to date in the Phase IB study on the verge of initiating patient dosing, we can anticipate the timing of antiviral data, and this timing is consistent with engaging in active discussions regarding a potential partnership after viral load data. Recently, we have initiated detailed confidential discussions regarding ANA598 with a number of party, and I am happy to report that the interests expressed by our potential partners is high. We expect our discussions to continue in advance as we continue to advance the clinical development of ANA598.

We look forward to updating you on our progress in the coming months. To that end, we have a number of planned presentations. On October 27, we will be presenting at the BIOCOM Investor Conference in San Diego; and on October 30, we will be presenting at the BIO Investor Forum in San Francisco. On October 31, we plan to release additional data on ANA598; data that will be contained in three posters at the AASLD but was not available at the time of abstract submission. The late-breaker poster described in the healthy volunteers study with ANA598 will be presented November 3, and the two preclinical posters on ANA598 will be presented November 4. We will be presenting in New York City at the Rodman & Renshaw Annual Global Investment Conference on November 11, the Needham Infectious Disease Conference on November 20, and the Piper Jaffray Healthcare Conference on December 3. We look forward to presenting our progress to you in these venues.

We’re now ready for questions.

Question-and-Answer Session

Operator

(Operator instructions) And our first question comes from the line of Ted Tenthoff with Piper Jaffray. Go ahead.

Ted Tenthoff – Piper Jaffray

Great, thank you very much. Thanks for the update, looking forward to the data coming at AASLD and early next year. Just to the point on partnering, there’s some positives, some negatives here in this environment. The positive being that HCV is really a hot space that’s heating up but at the same time, I think you can probably classify it as a buyer’s market right now. So how do you walk that line and generate interest in appropriate value for an early stage HCV asset?

Steve Worland

So, Ted, I think I would take a load of it, of exception to your characterization of it as a buyer’s market. So there’s been a great deal of interest in polymerase inhibitors, in particularly in non-nucleoside polymerase inhibitors. So if you look around and ask what companies of our size and current status might have a non-nucleoside inhibitor available for partnership, it’s a very small list of companies. So our experience to date, there’s been a number of companies that have been interested in talking about ANA598, and I think it’s fair to say the number of companies interested exceed by quite a bit the number of small companies who could offer a non-nucleoside polymerase inhibitor in clinical development for our potential partnerships. So we haven’t seen the dynamics looking as if it’s a buyer’s market at this point.

Ted Tenthoff – Piper Jaffray

If I think more generally though, with $32 million in cash, $25 million at year-end, more in terms of just the larger factors beyond just the HCV world, you’ve got leading [ph] cash and partners being acutely aware of that.

Steve Worland

Again, I think that just as I’ve said, there are many people interested in ANA598. And so the more we can establish the properties of ANA598, and then the more we can make sure that partners are aware of that. That’s how we intend to handle that issue.

Ted Tenthoff – Piper Jaffray

Okay, great. Thank you.

Operator

Our next question comes from the line of Liisa Bayko with JMP Securities. Go ahead.

Liisa Bayko – JMP Securities

Hi, guys, and congratulations on a very productive quarter.

Steve Worland

Thank you.

Liisa Bayko – JMP Securities

My first question, just I want to focus first on the ANA773. I’m trying to figure out is there – does it look like there is going to be a therapeutic window where you can eliminate or decrease some of the side effects with interferon and still get the activity, that separation? So I guess my first question is did you see any of the common side effects with interferon at the 800-mg dose that you are starting with for the next stage?

Jim Freddo

Hi, Liisa, this is Jim Freddo. What I can say is that we did not see a great deal in terms of tolerability issues at 800 mg.

Liisa Bayko – JMP Securities

Okay.

Jim Freddo

All the adverse events that we saw were mild. There were no discontinuations in that cohort. And again, as we’ve said in the release, biomarker induction was seen in the majority of the subject. Now again, this is a blind study; the blinds have not been broken yet, so we’re including even the placebo patients in that analysis.

Liisa Bayko – JMP Securities

Okay.

Jim Freddo

So we’re encouraged that we can, indeed, drive up to levels where we can show biomarker induction consistent with the effects that we would like to see and consistent with the effects that you see with interferon, in terms of downstream markers with a very tolerable profile.

Liisa Bayko – JMP Securities

Okay, and then the next stage of your study, will that be in treatment naïve or treatment – well, treatment experienced patients?

Jim Freddo

This study is being conducted in the Netherlands in the way the – if people criteria are worded, they’re either treatment naïve or patients who responded so became undetectable while on interferon, but there will be some patients who relapsed once they had stopped interferon and ribavirin therapy.

Liisa Bayko – JMP Securities

Okay.

Jim Freddo

So this is not achieved in FDR that we did respond to interferon.

Liisa Bayko – JMP Securities

Okay, great, that’s helpful. And then next question is what level of virologic load reduction, or however you’re going to look at it, would get you excited and make you think, “Okay, this is the load we’re going to pursue further”? What are you looking for?

Jim Freddo

We look – well, what we do, Liisa, is look back at data that other people have presented. And there’s not a lot, but there is some data of what you see with interferon alone over a four-week period and a number of citations, again, usually based on small numbers of patients. But a one-log drop, a one-and-a-half-log drop are pretty reasonable expectations for interferon over four weeks.

Liisa Bayko – JMP Securities

Okay, good. That’s a helpful framework. And then just on ANA598, any – what was the maximum tolerated dose? Was there – did you reach any? Was there a dose limit in toxicity associated with that?

Jim Freddo

No dose limit in toxicity, and that was actually not the goal of this study to drive to an MPD. But even at the three-gram cohorts, nothing that would have made us stop had we desired to go further.

Liisa Bayko – JMP Securities

Okay, and then are you going to be – are patients going to take this with food? Is that – did I read into that?

Jim Freddo

Yes, in the one case study, we will be dosing twice a day with food.

Liisa Bayko – JMP Securities

Okay, and then just –

Jim Freddo

And, Liisa, if you think about the way we’ll be using this in subsequent studies, interferon and ribavirin in our Phase IIa study, ribavirin is also dosed with food. So I think actually not having to have a drug where you need to dose in the fasting state is going to make it easier to dose in combination.

Liisa Bayko – JMP Securities

Okay, great. And then just one final question just to do with your strategy around capital raising? Are – is your intention then to fund yourself through some upfront payment with a partnership rather than really having to raise money?

Steve Worland

I think, Liisa, we haven’t communicated any specific plan. What I can tell you though is that with some of the cash balance that we have, we feel very comfortable will go through the first quarter of next year. And again, we expect to have a full viral load data set from ANA598 in that time frame and now, a first look at the viral load from ANA773 as well.

Liisa Bayko – JMP Securities

Okay, all right. Well, thank you very much.

Operator

Our next question comes from the line of Eric Schmidt with Cowen. Go ahead.

Eric Schmidt – Cowen

Thanks for taking the call. Just another question on the centric [ph] profile of ANA773. What do you think is causing the flu-like side effects? Do you detect any systemic interferon? What’s the mechanism at play here?

Jim Freddo

So we knew from previous data that we can actually drive to high end of doses where we have a release of interferon, and I think what we’re seeing in these higher doses is that we can drive the response enough to have enough release of interferon from these plasma-situated red cells [ph] to give you side effects similar with an interferon injection.

Steve Worland

Eric, I might add to that. I think there were maybe more trends and exposures to interferon than as to percolated [ph] interferon. So we may be able to have sustained biomarker induction without requiring sustained exposure to interferon. In the previous alpha work, we saw either you couldn’t detect interferon or we saw trends in spikes, as opposed to the percolated [ph] products which are designed to maintain continuous exposure.

Eric Schmidt – Cowen

So is it fair to say at the 800-mg dose, you’re saying no OAS induction but not systemic interferon production toward lower levels?

Steve Worland

It’s safe to say that we’re seeing OAS inductions and lower levels of interferon, yes.

Eric Schmidt – Cowen

Lower levels than you would find if you were providing interferon systemically?

Steve Worland

Absolutely, yes. I think (inaudible).

Eric Schmidt – Cowen

And similar levels of OAS?

Steve Worland

I’d have to look at whether the levels are similar with the 800 mg and again, a part of the reason I’m hedging is because the data that we have is still blinded. So we’re looking at – we’ll see both patients mixed in with active patients. I’d be better able to answer that question once we are un-blinded and eliminate the placebo subjects from our analyses.

Eric Schmidt – Cowen

Okay, fair enough. When will we see this ANA773 Phase I data?

Steve Worland

It’s a very good question and probably, if I had to say right now, I’d be looking at some abstracts that we could submit in the early part of 2009.

Eric Schmidt – Cowen

Okay, on ANA598, either Jim or Steve. Could you just remind us why you’re starting with twice a day given the long half-life of this product?

Steve Worland

Sure. And again, as we mentioned in the script, it doesn’t preclude us from going eventually to once-a-day dosing that we would look at in longer study. Remember that this study, we were limited to three days of dosing. If you look at a drug that has a half-life of 24 to 30 hours, you wouldn’t expect a steady state level with once-a-day dosing until day five or six. Since we are limited by the agency to three days of dosing, we wanted to make sure we drove up to important exposures more quickly.

Eric Schmidt – Cowen

Okay, and what would be, in your view, at day four a viral load deduction that’s impressive enough to warrant continued study?

Jim Freddo

So we’ve not committed to a number. What I would say is that based on what we’ve seen in the chimp models and based on the exposures that we’ve seen in the healthy volunteer study, we’re optimistic. I would also remind you that if you look at the numbers for the Gilead compound 9190, with the dose that they are taking into their Phase II studies which is 40 mg b.i.d., based on our 1.4 log drop over an eight-day dosing period.

Eric Schmidt – Cowen

Great, thanks a lot.

Operator

(Operator instructions) And our next question comes from the line of Jason Kolbert with SFG. Go ahead.

Jake Ono – SFG

Hi, good afternoon. This is Jake Ono [ph] from Harvard, sitting in for Jason. Just a question on the timing of the progression of the Phase I studies with regard to the parallel animal tox studies. Is it the intention to be completely finished with the animal tox by the time Phase II is ready in the summer? Or will you still be working on that?

Jim Freddo

Yes, so again, the timing of the chronic tox studies was solely related to when we would be able to do longer-term dosing in Phase II studies, which would start in the mid-portion of 2009. The way I would see it today based on as being starting six- and nine-month studies in September, we would probably be in a position to design a longer than 28-day study in the first Phase IIa study, with the plan I’m being able to amend it as we get additional tox information reading out from those chronic studies – to be able to amend it for longer-term dosing in our first Phase II study.

Jake Ono – SFG

Okay, that’s helpful. And then do you have any specific timing on when the dosing will begin for the Phase Ib for ANA598? Is that imminent?

Steve Worland

We said we’re screening patients right now, so you can read into that. The effect [ph] to be soon.

Jake Ono – SFG

Okay. All right, great. Thank you very much.

Operator

Ladies and gentlemen, I show no further questions at this time. I would like to turn the call back over to Dr. Worland for any concluding remarks.

Steve Worland

Thank you again for listening today. We are excited about our plans and anticipate the data for ANA598 and ANA773 programs, and we look forward to reporting our progress to you in the coming months.

Operator

This concludes the Anadys Pharmaceuticals’ third quarter 2008 conference call. You may now disconnect. Have a wonderful day.

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