ISIS Pharmaceuticals Inc. Q3 2008 Earnings Call Transcript

Nov.10.08 | About: Ionis Pharmaceuticals, (IONS)

ISIS Pharmaceuticals Inc. (ISIS) Q3 2008 Earnings Call November 10, 2008 8:30 AM ET

Executives

Kristina Lemonidis - Associate Director of IR

Stan Crooke - Chairman and CEO

Lynne Parshall - COO and CFO

Beth Hougen - VP of Finance

Analysts

Adam Walsh - Jefferies

Eric Schmidt - Cowen & Co.

Jim Birchenough - Barclays Capital

Carol Werther - Summer Street Research

Mark Monane - Needham

Joseph Schwartz - Leerink Swann

Debjit Chattopadhyay - Boenning & Scattergood

Ted Tenthoff - Piper Jaffray

Jim Birchenough - Barclays Capital

Operator

Welcome to ISIS Pharmaceuticals third quarter financial results conference call. As a reminder, today's call is being recorded. Leading the call today from ISIS is Dr. Stan Crooke, ISIS Chairman and CEO. Dr. Crooke, please begin.

Stan Crooke

Thanks, Michelle. Good morning and thanks to everyone for joining us on today's conference call to discuss our third quarter financial result. Lynne will review the financial results on our progress this quarter and then I will focus primarily on the milestones that we hope to achieve in the coming months.

Joining us on today's call are Lynne Parshall, COO and CFO; Beth Hougen, VP of Finance and Kristina Lemonidis, Associate Director of Investor Relations.

Kris, could you read our forward-statements please.

Kristina Lemonidis

Sure. Thanks, Stan. Good morning, everyone A reminder to everyone, this webcast includes forward-looking statements regarding our Isis Pharmaceuticals business, the financial position and outlook for Isis as well as its Ibis Biosciences subsidiary and its Regulus joint venture, and the therapeutic and commercial potential of the company's technology and products in development.

Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement, including those statements that are described as Isis' goals of projection. Some statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing, and commercializing drugs that are safe and effective for use in developing and commercializing systems to identify infectious organisms that are effective and commercially attractive, and in the endeavor of building a business around such products.

Isis' forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Isis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Isis.

As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Isis' programs are described in additional detail in Isis' Annual Report on Form 10-K for the year ended December 31, 2007, and it's quarterly report on Form 10-Q for the most recent quarter which is on file with the SEC. Copies of this and other documents are available from the company.

Thanks, Stan.

Stan Crooke

Thanks, Kris. All of you know that we have pioneered our antisense technology, the platform that is the most direct route from the genome to the patient and is efficient enough to generate a pipeline of 19 drugs that are in development today. And, we plan to continue to grow our pipeline by at least two to four drugs a year.

This pipeline is a direct result not only of the efficiency of our antisense drug discovery platform, but also our business strategy in which we bring our drugs to Phase 2 proof-of-concept and then license them, avoiding the need to build extensive infrastructure to conduct large scale, late-stage clinical trials or for marketing and providing funding to continue to produce new, exciting drugs to move forward.

All of this generates the strong financial performance that we expect today. We ended the quarter with over $500 million in cash, and we're on track to meet our cash and net operating loss guidance for the year, thereby ending the year with a cash balance that is sufficient to fund Isis activities for significantly more than five years.

We also expect to augment our cash with collaboration funding and milestones as the drugs in our partnerships progress in development. The progress we've made this year, we think it's just a beginning and look forward to an excellent fourth quarter that will set the stage for another productive year in 2009.

\

Before we proceed further, I do want to remind you that tonight during the American Heart Association meeting in New Orleans, we will be hosting an investor event in which we will focus on our entire cardiovascular program. This event will be webcast for those of you who are not able to join us in New Orleans and I recommend it to you, I think it will be interesting.

Now, with that, I'll turn the call over to Lynne to go over the financial results. And then, as I said, when Lynne is finished, I'll discuss what we have coming up for the rest of the year.

Lynne Parshall

Thanks, Stan. As Stan said, we've had another great quarter. This year we've demonstrated that our business strategy is working and producing concrete results across the board.

We continue to advance and enhance our pipeline while using our pipeline to produce significant financial rewards through valuable partnerships. The result is that we're in the strongest position, both in terms of cash and our pipeline that we've ever enjoyed. And we look forward to an equally productive 2009.

This year, as I said, we've demonstrated the success of our business strategy. We completed the license of mipomersen and advanced mipomersen in Phase 3 clinical study towards a planned 2010 NDA.

We and our partners have reported positive and encouraging data on a number of the exciting drugs in our pipeline, including mipomersen in cardiovascular disease, OGX-011 and LY2181308 in cancer and ATL1102 in multiple sclerosis.

We and our partners have moved two new drugs into development and advanced two of the drugs in our pipeline into humans. Regulus, our microRNA joint venture with Alnylam, assembled a world-class management team and Scientific Advisory Board and completed a major corporate partner transaction with GSK.

We found the ideal partner in Abbott for a diagnostic subsidiary, Ibis. Abbott brings a vast amount of experience in clinical diagnostics to the table. At the recent ICAAC meeting, Abbott and Ibis presented plans for the next-generation instrument targeting to diagnostics market, and Abbott is already selling Ibis instruments and assay kits.

This is just a snapshot of the successes we've already had this year. Each one taken individually would be a significant accomplishment. Taken together, they reflect progress on all fronts and set the stage for far more accomplishments to come.

Now, let me briefly discuss some of the financial highlights of the third quarter. I am assuming you've all read our release, so I'll not go through all of the details, but I'll be happy to answer questions when we are through.

We remain on track to meet our financial guidance of a pro forma net operating loss of less than $15 million and a year end cash balance of $450 million, which is sufficient to fund our activities for at least five years.

We ended the third quarter profitable with more than $500 million in cash. Over the last 15 months on a pro forma basis, we've recorded three quarters of positive net income and two quarters of positive net operating income with our current quarter coming close to positive net operating income.

I need to remind everyone that, although we've reported another profitable quarter this quarter, we're not yet to the point of sustainable profitability. And our quarter-to-quarter performance will continue to fluctuate based on one-time events.

However, we believe that the positive financial results we've reported for the first three quarters of this year reflect how close the successful execution of our business strategy has brought us to sustainable profitability.

And finally, this year, we've received nearly $400 million in new cash from our drug development technology partners.

As you can see, we remain financially strong. We've added value to the company through our business development strategy that takes advantage of the efficiency of our antisense drug discovery technology and our intellectual property estate.

Furthermore, we've developed a technology platform that maximizes every dollar we invest into our research and development, a strategy that allows us to expand our pipeline. We believe this strategy will lead to sustained strong financial performance.

Now, I'll turn the call back over to Stan.

Stan Crooke

Thanks, Lynne. We've had another good three quarters. I think we've made progress in every element of our business. And we are looking forward to the fourth quarter being another productive quarter.

And I'll close with just a few comments that are focused on the fourth quarter. Tonight, as I mentioned earlier, we'll host a webcast that will focus on our cardiovascular pipeline. For that webcast we'll be joined by two important mipomersen investigators, Dr. Erik Stroes from the Academic Medical Center in Amsterdam, the Netherlands; and Dr. Evan Stein, from the Metabolic and Atherosclerosis Research Center in Cincinnati, Ohio.

Dr. Stroes will report topline data from a study in which we are using NMR spectroscopy to evaluate whether mipomersen treatment is associated with increased liver fat. And Dr. Stein will provide an update on the performance of mipomersen in the open-label extension study that we've discussed on a number of occasions before, and in which patients have now been exposed to mipomersen from three to 23 months with a median continuous exposure of 16 months.

Mipomersen is, of course, the most important asset in our cardiovascular pipeline. But that pipeline is more than just mipomersen and is being expanded with other exciting drugs as we progress.

PCSK9 is an excellent example of the efficiency of the Isis antisense drug technology. In less than a year from initiating the project, we have licensed the program to VMS for $15 million upfront and the potential to earn nearly $200 million in milestones as the program is advanced. Within another 10 months, together with VMS, we selected a development candidate that is moving toward human clinical trials.

All told, from the time the relationship with PCSK9 was identified in the Hobbs' Lab at UT Southwestern Medical Center in 2006, to the time we plan to have the drug in humans that will be a little less than three years. I don't know of any technology that could as directly and effectively take advantage of this novel genetic insight and do what we just described.

Unlike PCSK9 which was only recently discovered and has been understood for some time that CRP is an independent predictor of coronary events. In addition, there are a number of diseases in which CRP is thought to play a critical role, including end-stage renal disease, many inflammatory diseases, such as rheumatoid arthritis and Crohn's disease and other diseases, such as [cacaxia].

Both our CRP and PCSK9 drugs are important additions to our cardiovascular franchise and we have many other opportunities, not only in LDL-cholesterol regulation, but also in clotting factors, triglyceride management and other lipid factors.

So tonight, we'll discuss several of these other drugs that are in advanced research that, we expect to enter our cardiovascular development pipeline in the upcoming months. And of course, beyond this evening, we have a full agenda.

Mipomersen continues to progress in clinical development. We've completed enrollment in our pivotal trial. And we are still on track to file an NDA for homozygous FH in the second quarter of 2010 -- I'm sorry, that's the second half of 2010.

We have already started a Phase 3 study in heterozygous FH patients this year and we will initiate three new trials on mipomersen, before the end of the year. We are also making significant progress in our overall regulatory planning and in our plans for an outcome study.

In addition to the successes we've had in our cardiovascular program, we continue to advance our drugs in other therapeutic areas, including metabolic disease. We're excited about our partner drugs and the progress that we are making with our later-stage antisense drug that targets pdb1b and our earlier stage program targeting SGLT2.

Furthermore, we continue to move our CNS program closer to the clinic. Our SOD1 targeted drug could provide a new and novel way to treat amyotrophic lateral sclerosis and we are looking forward to moving this drug into humans shortly.

In addition, we will be presenting data on some of our earlier programs in CNS diseases at the upcoming Neuroscience meeting this month. Our early results in our CNS program provide evidence of the therapeutic use of antisense drugs for these devastating degenerative diseases.

Finally, we hope to report much more progress in the commercialization of Ibis technology and in the potential acquisition of Ibis by Abbott. In short, beginning tonight, we expect to have a fourth quarter that is as exciting as the past three quarters of 2008 were and that set the stage for another productive year in 2009.

Now with that, I'll open the call up for questions. Michelle, if you can set us up for questions please.

Question-and-Answer Session

Operator

(Operator Instructions). We'll go to Adam Walsh with Jefferies.

Adam Walsh - Jefferies

Good morning, guys, thanks for taking my question. I assume you can hear me.

Stan Crooke

Yes. Thank you.

Adam Walsh - Jefferies

Wonderful and Stan, we've been over this before. Maybe you could frame up for us again, as well as the street, exactly how to approach the data that's going to be talked about tonight at AHA, particularly, what are the baseline hepatic fat levels for these heterozygous FH patients? What would define on MRS, a positive outcome in terms of liver triglyceride content? Thank you.

Stan Crooke

Well, no news is good news. I think the simplest thing that you should watch for is that we hope that we have no news. Remember that these are heterozygous FH patients, they have serious LDL problems, they are on multiple drugs and they were allowed in the study if they had normal liver fat. What we hope to see is no suggestion of a drug-related increase in liver fat at the Phase 3 dose, 200 milligrams per week, after 13 weeks of administration.

Adam Walsh - Jefferies

Okay. That's helpful and one quick follow-up to that. What is the baseline inclusion criteria for liver fat and what's the threshold that defines normal and what is the upper threshold that we define abnormal? Thanks.

Stan Crooke

Normal is defined as basically anything less than 5% liver fat on MRI, abnormal then is 5%.

Adam Walsh - Jefferies

Thank you.

Operator

Okay.

Stan Crooke

You’re going to hear from real experts tonight, who will tell you all about that study. So I'd save most of my questions for them.

Operator

We'll take our next question from Eric Schmidt with Cowen & Co.

Eric Schmidt - Cowen & Co.

Good morning. First a question for Lynne, just about the potential for sustainable profitability, it's the first I've heard you speak at length about this. Is this a near-term goal of the company or a goal of the company over the next couple of years even?

Lynne Parshall

I don't know any company that doesn't have a goal of sustainable profitability and we do, too. We're actually quite excited and really pretty proud about how close we've come. Obviously, profitability based on partnering is extremely important to us as part of our business strategy and to provide the financial strength that we've got. What we're really looking forward to is, profitability based on commercial sales of our products, the first potential of which is mipomersen, where we're planning a second half of 2010 NDA.

Eric Schmidt - Cowen & Co.

So not really until you launch that drug and sales get going, then?

Lynne Parshall

We think our financial performance this year is indicative of what our expectations are. We have been very successful in partnering, in bringing in both cash and in sustainable revenues. So, we think the strong financial position we've got this year is something that we expect to continue.

Eric Schmidt - Cowen & Co.

Okay.

Stan Crooke

Eric, I think the most important things I'd add to that, we intend to execute both the technology and the business strategy of the company. The natural outcome of executing on the strategy is the financial performance that we're describing and what we are optimistic we'll be able to report next year.

I think the most important thing that we can say is that we are very financially secure. I think that feels especially good in this environment. We will not need to raise new funds in the foreseeable future.

Eric Schmidt - Cowen & Co.

Okay, that's certainly pretty clear from the statements, thanks. Stan, just a question for you on the mipomersen strategy in terms of getting approval for the non-homozygous FH patient population, can you just update us exactly on what next steps have to happen there in terms of starting studies, either in the highest of high-risk apheresis-eligible patients or in the broader outcomes oriented population? When do you think those studies will start?

Stan Crooke

I'd like to leave as much of the answer to these questions to Genzyme as I can, Eric. To be brief, we do expect to start the apheresis study. We do think that can broaden the indication.

We've had productive conversations with European regulatory agencies that encourage us to continue to be optimistic that broader indications can be achieved in Europe with just LDL reduction.

Eric Schmidt - Cowen & Co.

Okay, we'll stay tuned to them. Thanks.

Stan Crooke

Thank you.

Operator

Our next question comes from Jim Birchenough with Barclays Capital.

Jim Birchenough - Barclays Capital

Hi, guys. A few questions. Stan, just on the NDA filing in the second half of 2010, do you anticipate that that's going to be a filing just on homozygous FH or is that going to be a broader, high-risk filing?

Stan Crooke

The minimum filing is homozygous FH. I'd like to leave the answer there, if I may, Jim. Again, I want most of the communication about the filing strategy and the commercialization strategy for mipomersen to come from Genzyme.

Jim Birchenough - Barclays Capital

Maybe a broader question, just on the applications of the Jupiter study results that have come out in full detail and specifically what you think the implications are for mipomersen for your regulatory discussions. More specifically, have you been measuring CRP levels in your studies and should we look at CRP data in the data that we're going to get tonight from Dr. Stein?

Stan Crooke

So first, I think the Jupiter trial demonstrates two or three points that are important to us. First, it is possible to lower LDL even more significantly than 70 and to do that safely. I think over the long-term, the targets for getting LDL down in patients at various kinds of risks are going to go lower and that mipomersen is an almost ideal setting.

Second, this is just another additional information that doesn't prove but adds weight to the notion that CRP reduction can bring value to patients with cardiovascular disease. We’re quite excited about that in the context of the work that we're doing on our CRP antagonist.

Of course, we look at CRP as a target of interest in a wide range of diseases, not just cardiovascular. Our Phase 2 program will look at a number of diseases that are not just cardiovascular diseases, where we think lowering CRP should bring value.

Now, the third question you asked is, does mipomersen lower CRP? It does not. We have not seen any evidence in animals or man that it lower CRP. So, you should think of this as a drug that lowers all atherogenic lipids.

On the other hand, it does lower all atherogenic lipids. There is no drug that lowers all atherogenic lipids in the way that mipomersen does. We focus today in Jupiter on LDL and CRP, but there are people who feel equally strongly about LPa, people who feel equally strongly that triglyceride lowering is important. What's beautiful about mipomersen is it fixes your lipids, all of them.

Jim Birchenough - Barclays Capital

A quick final question for Lynne, if I can. Lynne, when you look ahead to '09, I know you can't break out individual milestones for all the different collaborations you have, but, could you give us a sense in aggregate, what are the milestones up for grabs in '09?

Lynne Parshall

From a dollar point of view?

Jim Birchenough - Barclays Capital

Yes.

Lynne Parshall

Yes. That's actually not a level of granularity we usually give in projections. We are going to give financial projections for 2009. We usually do that in our year end conference call. So we're still working on that. I would expect 2009 not to look dramatically different from 2008. We will have some increased spending with all the new studies that we're starting for mipomersen. I wouldn't expect it to look dramatically different.

Jim Birchenough - Barclays Capital

Thanks for taking the questions.

Stan Crooke

Thanks, Jim.

Operator

Our next question comes from Carol Werther with Summer Street Research.

Carol Werther - Summer Street Research

Thanks for taking the questions. Stan, when would we expect results from the homozygous trial with mipomersen?

Stan Crooke

We plan to file in the second half of the year of 2009 and the results we'll have obviously, before then.

Carol Werther - Summer Street Research

Okay. Can you just talk a little…

Stan Crooke

I'm sorry. You said homozygous FH, right?

Carol Werther - Summer Street Research

Yes.

Stan Crooke

Sorry, next year, next year, whatever year this is. I'm confused about the year I'm in, sorry.

Carol Werther - Summer Street Research

So, sometime in 2009, we should expect results?

Stan Crooke

Yes.

Carol Werther - Summer Street Research

Okay. The filing is in the second half of '010, right?

Stan Crooke

Yes.

Carol Werther - Summer Street Research

Okay. Then, can you just discuss a little bit more where you are with starting Phase 1 trials with your pipeline?

Stan Crooke

Well, CRP is underway.

Carol Werther - Summer Street Research

Okay.

Stan Crooke

Glucagon is underway. Altair has begun their Phase 1 trial with our aerosol IL-4 inhibitor. We are some months away, before PCSK9 gets started in Phase 1 trials. We hope to get our SOD1 drug into Phase 1 trials here very shortly.

Carol Werther - Summer Street Research

Okay, great. Thank you.

Operator

We'll take our next question from Mark Monane with Needham.

Mark Monane - Needham

Good morning and thanks for taking my questions. First one on more on the Jupiter trial, I know we saw data with mipomersen in combination with statins. Did you test any patients that were on Crestor during that trial and do you believe that the mipomersen combinability will be across statin effect?

Stan Crooke

In our trial we allowed basically all the statins and so we do have experience with statins other than lipitor and we do expect that it combines equally well with all statins.

Mark Monane - Needham

Very good. Then, in terms of the CNS program that you have at Isis. Could you describe what you know about antisense technology crossing the blood-brain barrier? Is that something that's available today with the second-generation molecules? Is that necessary for the diseases that you're thinking about in neuroscience program?

Stan Crooke

No, antisense drugs do not cross a blood-brain barrier, that's intact, and we certainly don't expect to solve that problem. With the VLA-4 inhibitor, which is administered systemically, you will know that the target is actually outside the blood-brain barrier.

With the other drugs that we are working on, we are giving those directly into the central nervous system through intrathecal administration, through these pumps. Of course, the diseases we are targeting are severe degenerative diseases, because those are the patients who would tolerate such an invasive drug delivery system.

Mark Monane - Needham

Last question is that, a number of targets that you are already looking at with second-generation antisense technology, maybe appropriate for microRNA as well. At the AHA, I believe it is tomorrow, they're having this whole symposium on microRNA and their role in thinking about cardiovascular disease therapeutics and diagnostics.

Can you talk about what kind of strategy you're going to use for Regulus, in terms of matching or pairing up the antisense therapeutic potential with the microRNA potential?

Stan Crooke

Well, the way to think of microRNA's, Mark is that they are just targets. We have no intention of developing, nor does Regulus, developing microRNA per se as a drug. Rather, think of microRNA's as a set of new targets that are ideally suited for antisense technology. They're 20 nucleotides long, the same length as our drugs. So, all of the drugs that have been used to target microRNA successfully by Regulus and Alnylam and us and others are antisense drugs.

So the way you take advantage of microRNA's is through antisense, and it's the only way I can imagine that you would be able to take advantage. The great thing about microRNA's is that there are many of them and they appear to be involved in a wide range of physiologic and pathophysiologic processes. The hard thing about microRNA's is to figure out which ones you tackle.

That’s what we've been doing with Regulus sorting through this deck of new opportunities and identifying those that look to be the most important and also the most amenable to treatment with the antisense drugs that we've invented. As you know, Regulus is pursuing a number of interesting opportunities in inflammatory disease, cardiovascular disease and viral infectious disease.

Mark Monane - Needham

Thanks very much for the added information.

Operator

(Operator Instructions). We’ll move along to Joseph Schwartz with Leerink Swann.

Joseph Schwartz - Leerink Swann

I was wondering if you could give us an update on your progress clearly defining the patients that will be enrolled into the apheresis-eligible study. What will these patients look like?

Stan Crooke

Joe, I think my preference is there, and I am sorry to do this. I think I will be describing that in, or, our partners, Genzyme will be describing all of that in more detail as the studies get underway.

In general, the apheresis-eligible patients are simply people who are heterozygous or homozygous or functional hypercholesterolemic heterozygous and have LDL's greater than 200 with documented coronary heart disease, or greater than 300 if they don't have heart disease.

That's been defined for a device that was approved. So that's the target group we'll be looking at. I'd like to leave any more precise answer than that to the description of the study when we get it underway.

Joseph Schwartz - Leerink Swann

So we don't know how long enrollment will take?

Stan Crooke

Well, I think we have a pretty good idea there. Enrollment for mipomersen trials has been very rapid. If you think about the enrollment in CS5, the homozygous study, where you really do have rare patients and few centers, I think that tells you everything you need to know about enrollment for mipomersen in virtually any setting you want to design. That won't be a problem.

Joseph Schwartz - Leerink Swann

Okay. As far as the MRI study goes, how confident are you that 13 weeks of administration is enough time to detect perturbations in the liver? How specific is MRI as opposed to other more invasive means, which are obviously less palatable but would certainly clear up any questions about off target effects?

Stan Crooke

Well, I don't think there's any evidence that we have off target effects, not in animals or human beings. Probably the best example of drugs that produce an increase in liver steatosis are the NTP inhibitors. At any dose where there was any meaningful reduction in LDL there was a very rapid, certainly less than 13 weeks substantial increase in liver fat. That was associated with changes in liver enzymes.

So, I think we feel pretty confident that if we don't see an increase by 13 weeks, it's unlikely that we're going to have a significant incidence of steatosis with any length of treatment with mipomersen. What we're looking forward to is performing similar studies with longer term treatment to determine whether we can actually reduce liver fat, as we showed in mouse and monkey.

Remember that in mouse and monkey, fat-fed mice and fat-fed monkeys and long-term toxicity studies, we showed no increase in liver fat. In fat-fed animals we showed a very profound decrease in liver fat. Even in the lean monkeys that were used in tox studies, we had a trend toward decreased liver fat.

So we think 13 weeks is more than enough if we were going to have a real problem with steatosis. We need longer term treatment to determine whether we can produce a benefit as we've seen in the animals. I'm not an expert on MRI and liver fat, but what the experts tell me is it's reasonably sensitive, and they rely on it as the primary tool to determine whether a patient has steatosis. They feel better about it, I think, than blind liver biopsies, for example.

I would suggest that you to ask the folks who are really experts tonight. Does that answer your questions, Joe?

Joseph Schwartz - Leerink Swann

Yeah, that's helpful. Just one follow-up, if I could, on the open-label extension study, could you remind us of the number of patients that were treated beyond six months and a year last time? How do the figures stand now?

Stan Crooke

Well, the total number of patients who were enrolled were 20. I think we had 17 that were treated longer than six months last time. This study has progressed, and so most of the folks who have been treated now have been treated a year or longer.

Joseph Schwartz - Leerink Swann

Thanks again.

Operator

Our next question -- I do apologize for the mispronunciation -- comes from Debjit with Boenning & Scattergood.

Debjit Chattopadhyay - Boenning & Scattergood

Good morning and thank you for taking the question. Just wondering, if the European agencies do accept LDL reduction as the valid end point, how long before do you foresee some kind of a filing or approval in that setting?

Stan Crooke

We are not quite ready to answer that question yet. As I say, I believe that's a question that I have to defer to Genzyme to answer. What I can say is, we're making really great progress and we're feeling very comfortable in our belief that a broader European filing can be achieved with LDL reduction.

Debjit Chattopadhyay - Boenning & Scattergood

Stan, one more question regarding your obesity program. As most of the big pharma walks out of it, could you just give us some insight into the targets that you are looking at for anti-obesity drugs here?

Stan Crooke

Yes. Our focus is peripherally acting anti-obesity drugs. So, we're focused on factors that are made in fat cells. As you know, the fat cell has become a recognized endocrine organ and factors that are involved in managed metabolism that are made in the liver.

One element of our program that very much differentiates us from many of the large pharma programs is that we believe that centrally acting anti-obesity agents will always be associated with some problems. We think that there is a great need for peripherally acting anti-obesity agents.

We have been focused on a number of fat-derived and fat cell localized targets, including things like adiponectin and different factors in transcription and so on, that are involved in obesity. We are going to be talking more about our obesity program next year as we progress in identifying the drugs that we think are most likely to be the first groups to go into man.

Debjit Chattopadhyay - Boenning & Scattergood

Thank you. One more final follow-up question. The SGLT2 inhibitor, could you provide some more insights into how far that has come long?

Stan Crooke

It's moving along very nicely. It's finishing tox now. We're looking forward to getting it into clinical trials here in the very near future. Remember, the Phase 1 studies with that drug have the benefit of being pretty definitive. We'll be able to measure urinary glucose and reductions in glucose. We'll have a very good idea very early on whether that drug is working in man as it has in animals.

Debjit Chattopadhyay - Boenning & Scattergood

Thank you very much and good luck

Stan Crooke

Okay. Thank you.

Operator

Our next question comes from Ted Tenthoff with Piper Jaffray.

Ted Tenthoff - Piper Jaffray

Great. Thanks. Stan, how are you?

Stan Crooke

We're doing great.

Ted Tenthoff - Piper Jaffray

Good to hear. Quick question for you. Actually, one of your earlier comments prompted me to bring this up, but you mentioned that the MTP inhibitors have a substantial early onset, although if I'm not mistaken, this weekend we saw that the liver fat was really in the only low double-digit percentage. I'm not sure if you had a chance to see some of that data that was just published this weekend.

It kind of triggered the question, as we start to look for the data that you're going to be discussing, what do you see as a range of acceptable liver fat? Is there a high end? Again, I know this is something that's very controversial and still being discussed. Based on what we saw on the MTP inhibitors this weekend, where do you think the current thinking is along those lines?

Stan Crooke

So first, I think of the MTP inhibitors as profoundly hepatotoxic. They are hepatotoxic in the mouse, they are hepatotoxic in the monkey, they are hepatotoxic in man and the liver toxicities were managed very, very closely in those studies and to a large extent by limiting how much reduction in LDL one sees. I think for every increment of LDL reduction, there is an increment of liver toxicity and it occurs at any dose where you get LDL reduction and it occurs rapidly.

So the question that would be, how high would liver fat go, if you gave doses that actually lowered LDL by 40, 50, 60%, as we've done? I think the answer to that would be, unattractive. What's comforting to me about all of our experience in man to date is that we have exposed our drug in the presence of lots of other drugs and lots of disease and never seen anything that even approached the kind of the effects that MTP inhibitors have.

I think most people that I've talked to anyway, will tell you that, an MRI liver fat of 5% is classified as abnormal. People don't seem to get worried until liver fat isn't quite a bit higher than that, maybe 30%. Certainly, if you have double-digits, people begin to be concerned. Five percent is sort of the cutoff for abnormal. Let me put it this way - we're looking forward to presenting the data on the MRI study tonight.

Ted Tenthoff - Piper Jaffray

I look forward to it.

Stan Crooke

Did that help you -- did that give you?

Ted Tenthoff - Piper Jaffray

Very much. So Stan, thank you.

Stan Crooke

Okay. Thanks Ted.

Operator

Our next question comes from Jim Birchenough with Barclays Capital.

Jim Birchenough - Barclays Capital

Hi, guys. To follow-up on the liver stuff that we'll see tonight, I'm imagining we are going to see an update on liver enzyme elevations in the extension study. To avoid some hand-wringing later, can you remind us what the rate was in these 20 patients? Is there any reason, why we should see an increased rate in the extension phase if it's a transient phenomenon?

Stan Crooke

What we have reported is that there were no new adverse events seen with extended treatment, that injection site reactions, which is something we're watching very carefully, actually did not worsen, just appeared to get less, in fact, with time, that self administration was well tolerated, that there were no further increases and in some cases, declines in ALTs while continuing to dose and, that there were no patients who experienced Hy's Laws. We would hope that tonight, you'll hear exactly the same story.

Jim Birchenough - Barclays Capital

Great. Then just on the liver imaging study Stan, can you remind us what the other cohorts are and where we are at in enrollment with those other cohorts and when we might see an update on patients with actual liver fat?

Stan Crooke

The cohorts that you'll hear about tonight will be the FHBL patients who are positive controls and the heterozygous FH patients who have no abnormal liver fat. We needed to get all these data before, we felt that we could move to people with high liver fat and we needed to be in a position where we could treat longer than 13 weeks because our hope is to show a decline.

Those studies in patients who have elevated liver fat at entry into the cohorts are just getting underway. It will be awhile before we know about it.

Jim Birchenough - Barclays Capital

Okay, terrific. Thanks for taking the added questions.

Operator

Doctor, there are no further questions in the queue.

Stan Crooke

If there are no further questions, I want to thank everyone for your attention. We look forward to having you join us tonight on the webcast. As I say, I think we've got quite a few interesting things to talk about in the fourth quarter and we look forward to that. Thanks.

Operator

This does conclude today's presentation. I hope you have a nice day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!