Executives
Jim Goff – Senior Director, IR
Dan Welch – Chairman, CEO, and President
John Hodgman – SVP and CFO
Bill Bradford – SVP, Clinical Science and Biometrics
Analysts
Tom Schrader – Rodman & Renshaw
Brian Abrahams – Oppenheimer & Company
Terence Flynn – Lazard Capital Market
Adam Cutler – Canaccord Adams
Jason Kolbert – Susquehanna International
Liisa Bayko – JMP Securities
Howard Liang – Leerink Swann & Company
Tom Russo – Robert W. Baird & Co.
InterMune, Inc. (ITMN) Q3 2008 Earnings Call Transcript November 6, 2008 4:30 PM ET
Operator
Good afternoon. My name is Christy and I will be your conference operator today. At this time I would like to welcome everyone to InterMune's third quarter 2008 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator instructions)
Mr. Goff, you may begin your call.
Jim Goff
Thank you operator. Good afternoon everyone and welcome to the InterMune Earnings Conference Call. This afternoon, we issued a press release that provides details of the company's financial results for the third quarter and first nine months ended September 30, 2008, as well as our 2008 guidance. This press release is available on our website at www.InterMune.com.
During the course of this conference call, we will state our beliefs and make projections and other forward-looking statements regarding future events and the future financial performance of InterMune. We wish to caution you that such statements are predictions and expectations, and actual events or results may differ materially.
We refer you to the company's publicly filed SEC disclosure documents for a detailed description of the risk factors affecting our business, especially our Form 10-K, filed with the SEC on March 14, 2008, and our prospectus supplement filed with the SEC on September 21st, 2007. These documents identify important factors that could cause our actual results to differ materially from our projections and other forward-looking statements. These risk factors include regulatory, revenue, intellectual property, clinical development and other risks relating to our business.
Throughout the call we will refer to our commercial product, interferon gamma-1b, using its trade name, Actimmune, even when describing investigational uses. We refer you to our website for complete prescribing information for Actimmune.
On the call today are Dan Welch, InterMune's Chairman, Chief Executive Officer, and President; and John Hodgman, our Chief Financial Officer. Dr. Bill Bradford, our Senior Vice President, Clinical Science and Biometrics, will join us for questions and answers.
During today's call we will review our progress in the third quarter and first nine months of 2008, share our financial results for the three-and-nine months period ending September 30, 2008, and discuss our 2008 financial guidance. We will then open the call to your questions.
I will now turn the call over to Dan Welch.
Dan Welch
Thanks Jim and thank you everyone for joining us today.
The third quarter and recent events have highlighted our significant progress on pirfenidone and ITMN-191. I will first discuss the pirfenidone highlight and the upcoming events on pirfenidone.
As many of you know Shionogi & Co. of Japan has rights to pirfenidone in that country and has conducted successful Phase II and Phase III studies for pirfenidone and IPF in Japan. On October 16, Shionogi reported approval of its Japanese NDA to market pirfenidone brand named Pirespa in idiopathic pulmonary fibrosis or IPF.
At the same time we provided an update on our Phase III CAPACITY program in the US, Europe, and Australia. In that update we confirmed excellent study conduct in our Phase 3 CAPACITY program for pirfenidone in IPF, with 97% of surviving, transplant-free patients having completed their Week 72 Study Visit. All patients must complete a final visit, a study visit 30 days after treatment completion. These last visits have now all been completed. Based on this timing, we expect to report top-line results from CAPACITY in January or in February of 2009.
As we wind down capacity we are in the process of transferring patients from the CAPACITY studies to an extension study called recap [ph] in which all patients will receive pirfenidone. We are very pleased that the vast majority of patients who completed the CAPACITY trials have chosen to be enrolled in recap and we expect the enrollment process to be completed by the end of this month.
Assuming positive results for CAPACITY, we assume the recap trial will continue to run until regulatory approvals for pirfenidone are secured.
Turning now to our hepatology program, we announced in early September that we had earned a $15 million development milestone under our development collaboration with Roche for ITMN-191. Under the terms of our 2006 collaboration agreement, the responsibility for ITMN-191 clinical program is now in the process of being transferred to Roche which, starting in Phase 2, will have primary responsibility for completing the global development and registration program.
At the AASLD meeting, which transpired a few days ago, we presented eight posters on our hepatology programs, including ITMN-191. We reported the following highlights regarding ITMN-191.
First, the median viral kinetic results for 191 were competitive with those published for other direct antiviral compounds when used in monotherapy for 14 days in treatment-naive patients. We also reported excellent safety and tolerability for 191 in all dosage regimens.
Finally, we also reported that in the in-vitro combination of 191 with the active moiety of polymerase inhibitor R7128 in a 14-day replicon clearance assay and in a 3-week colony formation assay resulted in clearance of the HCV replicon and reduced or suppressed the emergence of drug-resistant viral strains. These results suggest that the combination would likely result in significantly greater antiviral activity than has been observed with either of these agents in previous monotherapy trials.
I will now comment on our near term milestone in hepatology. As many of you know, we have an ongoing 14-day Phase 1b study of ITMN-191 plus the standard of care in treatment naïve patients. This study is a randomized placebo controlled trial in which we’re exploring various doses of ITMN-191 in both twice a day and three times a day regimens. Some of the dosage cohorts being explored in this study involved higher total daily doses than those studied in our monotherapy study, the favorable results of which we reported this week at the liver meeting in San Francisco.
While the 14 day triple combination study remains blinded and thus only limited inferences regarding safety can be made, adverse events to date have generally been mild to moderate and none have resulted in study group discontinuation. The trial is proceeding as planned and we expect to announce top-line results in this quarter.
In summary, the third quarter was won very strong progress for our two lead programs pirfenidone and ITMN-191 and the next 90 days or so will be very exciting for our investors. During this period to share important top-line results from both of our principal development programs.
I will now turn the call over to our Chief Financial Officer, John Hodgman. John will review our third quarter and first nine months 2008 financial results and also discuss our 2008 financial guidance. John.
John Hodgman
Thanks Dan, and good afternoon, everyone. I will focus first on our quarterly financial results.
InterMune today reported a net loss for the third quarter of 2008 of $12.5 million or $0.32 per share compared with a net loss of $23.1 million or $0.66 per share in the third quarter of 2007.
Total revenue in the third quarter of 2008 was $23.3 million compared with total revenue of $11.4 million in the third quarter of 2007, an increase of 104%. Total revenue in the third quarter of 2008 primarily consisted of revenue from the collaboration with Roche for the development of protease inhibitors including ITMN-191, which totaled $15.8 million in the third quarter of 2008 compared with $0.8 million in the same quarter of 2007. Third quarter 2008 collaboration revenue included a $15 million development milestone payment from Roche. Third quarter 2008 total revenue also included Actimmune revenue of $7.5 million compared with $10.6 million of Actimmune revenue in the third quarter of 2007, a decrease of approximately 29% reflecting lower off-label physician prescriptions of Actimmune for the treatment of IPF, which InterMune does not promote. Third quarter 2008 Actimmune revenue increased modestly over that of second quarter 2008 reflecting an 18% price increase taken in July.
Research and development expenses in the third quarter of 2008 were $25.7 million, compared with $23.4 million in the third quarter of 2007, an increase of 10%.
General and administrative expenses were $7.9 million in the third quarter of 2008 compared with $6.4 million in the same period a year earlier, an increase of 23%.
We will now discuss our financial results for the nine months ended September 30, 2008.
The net loss for the period was $65.4 million or $1.68 per share, compared with a net loss of $63.7 million or $1.85 per share in the first nine months of 2007.
Total revenue in first nine months of 2008 was $40.8 million compared with total revenue of $57.1 million in the same period of 2007, a decrease of 29%. Actimmune revenue totaled $23.3 million in the first nine months of 2008 compared with $44.6 million of Actimmune revenue in the first nine months of 2007, a decrease of approximately 48% reflecting the lower off-label sales of Actimmune for the treatment of IPF, which InterMune does not promote. Revenue from the collaboration of Roche was $17.5 million in the first nine months of 2008 compared with $12.5 million in the same period of 2007. Collaboration revenue in the first nine months of 2008 consisted of a $15 million development milestone and $2.5 million in amortization of the initial upfront and manufacturing milestone payments.
R&D expense was $78.3 million in the first nine months of 2008, a 3% decrease compared to the $80.8 million in the same period of 2007.
G&A expense of $22.5 million in the first nine months of 2008 was approximately 2% lower than the $23 million in the first nine months of 2007.
As of September 30, 2008, InterMune had cash, cash equivalents and available-for-sale securities of approximately $185.6 million compared with $188.3 million as of June 30, 2008.
Turning now to our 2008 financial guidance, which is unchanged from our prior guidance of July 31, 2008. For the year ending December 31, 2008, R&D expense is anticipated to be in the range of approximately $100 million to $110 million net of development costs and reimbursements under the Roche collaboration. G&A expense is anticipated to be in the range of approximately $25 million to $30 million.
That concludes the report of our financial results and our 2008 guidance. We are now ready to answer questions. Operator, please open the line for questions.
Question-and-Answer Session
Operator
Our first question comes from the line of Tom Schrader with Rodman & Renshaw. Your line is open.
Tom Schrader – Rodman & Renshaw
Hi, good afternoon.
Dan Welch
Hi, Tom.
Tom Schrader – Rodman & Renshaw
Just a couple of questions. The Japanese launch of pirfenidone, do you know when that will occur and if – has the price has been announced. Can you just walk us through when we would start to see financial results from that drug?
Dan Welch
Yes, to the best of our knowledge that launch is planned in the first quarter of next year. The price has not yet been presently set. It has been set; we are not previewed to that information. So I expect we wouldn’t be seeing or the world would not be seeing results of that quarter until the spring time of next year.
Tom Schrader – Rodman & Renshaw
Okay. And then the combination data, obviously very intriguing. Can you talk a little bit about what you would have to do to get a combination like that into humans? With two unapproved drugs do you need all the animal data with both drugs or can you tell us anything about what would have to happen?
Dan Welch
Yes of course. There are many regulatory jurisdictions all over the world and each has their own view as to what is required to initiate such studies. What is important of course is whatever the nature of toxicities might be in the extent to which they are or are not overlapping. Beyond that I wouldn’t want to share too much because there are other organizations there interested in prosecuting this type of development and I’d don’t feel like I want to share that – the knowledge we have gained in this endeavor.
Tom Schrader – Rodman & Renshaw
Okay, fair enough. Thanks.
Dan Welch
You are welcome.
Operator
The next question comes from the line of Brian Abrahams from Oppenheimer & Company. Your line is open.
Brian Abrahams – Oppenheimer & Company
Hi thanks for taking my question. A couple of questions on 191. Can you help us understand how you think about dose escalation in the ongoing combo study? Are you guys escalating until you reach a certain efficacy bar that you are comfortable with or are you escalating until you reach some sort of maximum tolerated dose.
Dan Welch
I will make a couple of comments and really the – I will have Bill Bradford remark to expand on those. So, we have a set number of cohorts that we have in mind. We’re doing the dose escalation. As I mentioned earlier the doses that we are exploring in terms of total daily doses are actually higher than those that we explored in the monotherapy multiple ascending dose study. That is an important new one that we’re communicating today. And we will do further dose escalation and regimen exploration in Phase II where the size and the scale of that study and of course, it would be an FPR result. That is where the real, the big experiment is done with. Perhaps Bill Bradford could expand on that if he feels.
Bill Bradford
Yes, obviously. We want to do sufficient work in the Phase 1 combo study too well position ourselves for success in Phase 2 and beyond and obviously that is to fully understand is PK is to fully understand exposure response relationships, as to fully understand safety in the – if the dose levels or the range of doses we anticipate taking forward. It is hard to distill it down to a precise metric, but it is really – we want to understand that drug well to position it well for success in later development.
Brian Abrahams – Oppenheimer & Company
In the initial group of I think cohorts that you were looking to study, were those – where some of those cohorts at total daily doses above what you looked at in the monotherapy study?
Dan Welch
That is correct, yes.
Brian Abrahams – Oppenheimer & Company
Okay and I realize the data is still blinded but just wondering if you have seen any dose related patterns to the side effect that might suggest a relationship to 191 and also you mentioned the AEs were generally mild to moderate, did you see any SAEs.
Dan Welch
I think it is really preliminary to start discussing the safety data a lot. As you said it is blinded and as you can well appreciate in this type of study it is hard to make inferences from blinded data here. We did say the amount has moderated; none have led to study drug discontinuation which obviously is a very important point. But really we’re not in a position to say much beyond that.
Brian Abrahams – Oppenheimer & Company
Okay. One more question and then I will hop back in the queue. Early in the fall you had received a milestone of $15 million from Roche. Without getting into specifics of what triggered that milestone can you please give us a general sense on how the bar for that milestone being triggered might relate to the bar for which you would report out the (inaudible), thanks?
Dan Welch
You are welcome, Brian. So we just as a general communication policy we don’t provide, also in consultation with our development partner Roche, we don’t provide details of the nature of the content of particular development milestones. So I’m afraid I can’t go into more detail than that.
Brian Abrahams – Oppenheimer & Company
And in terms of when you might report the combo data?
Dan Welch
We have said that we still expect to report the top line data from the triple combo in this quarter.
Brian Abrahams – Oppenheimer & Company
And what would trigger that?
Dan Welch
Completion of the study as we and Roche see it.
Brian Abrahams – Oppenheimer & Company
Okay, thank you very much for the information.
Dan Welch
You are welcome.
Operator
Our next question comes from the line of Terence Flynn with Lazard Capital Market. Your line is open.
Terence Flynn – Lazard Capital Market
Hi good afternoon. Thanks for taking the questions.
Dan Welch
Hi, Terence.
Terence Flynn – Lazard Capital Market
Just a follow up on Bryan’s question. Just wondering, so are you still, is 5 cohorts still the plan. Are you going to additional cohorts about those five?
Dan Welch
We talked about five and that was kind of the starting point that we had in mind at that particular time. We may or may not go above that. And so it could be more than five, it could be five. But that is the intention of the startup study.
Terence Flynn – Lazard Capital Market
Okay and then can you give us anymore insight into how you guys and Roche are thinking about the design of your Phase 2 study and the possibility of what dosing schedules, kind of have you explored schedules in that Phase 2 and possibly the dosing duration?
Dan Welch
Yes. Can’t go into too much detail there because we’re in late stage discussions with Roche as to the design of it, but I think it is safe to say that it would be a study of multiple months that would be obviously (inaudible) point. I think it is safe to say that we will likely explore dosing originals of Q12 and Q8 and probably an approach not too dissimilar from what you’ve already seen from other companies with similar products or compounds.
Terence Flynn – Lazard Capital Market
Okay, thanks a lot for that added info.
Dan Welch
You are welcome.
Operator
Our next question comes from the line of Adam Cutler with Canaccord Adams. Your line is open.
Adam Cutler – Canaccord Adams
Hi, thanks for taking the question. A couple of things. You are noting that you are going to higher daily doses in the 1b then you did in the 1a. I guess to drill down a little bit on some of the questions that were already asked about that. I mean is that partially to try to further explore whether you may in fact have a bid drug and maybe you already noted that you plan on selling both bid and tid in the Phase 2, but can you give us kind of your current feelings of how likely it is that 191 could be a bid drug?
Dan Welch
I think you know it is early days. We – the nature of these studies are 8 to 10 patients per cohort. They’re very small studies and very small cohorts and so you generally you like to escalate up to within a wide range of doses and explore the different regimens at the same time. So the nature of these studies, they are small. They are small cohorts. There are a lot of new onsets of the patients et cetera. So, I don’t think you should necessarily take anything from the comments about bid or tid or Q12 of Q8, only to say that there were some questions that have been presented to us as to are we constrained in the currently running Phase Ib triple combination study as to the doses of 191 that can be given. Are they constrained to those that have been explored in the multi ascending dose monotherapy study and the reason why we gave the information today is to answer that question that we are not constrained and it obviously tells you that there were no dose limiting toxicities observed in the multiple ascending dose. And so, we had some number of questions about that in the past, in the recent past particularly when we shared our monotherapy information. Good solid viral kinetic information and we had a lot – we had some questions could we escalate higher in the triple combination study and the answer is yes we can and yes we are. So that is the nature of that information to answer that question. I wouldn’t necessarily draw anything more from that.
Adam Cutler – Canaccord Adams
So, you have already completed one – a cohort at total daily doses higher than you did in monotherapy?
Dan Welch
Yes, I think we can safety say that.
Adam Cutler – Canaccord Adams
Thanks.
Dan Welch
We can safely say that.
Adam Cutler – Canaccord Adams
Okay, great. That is helpful. And then I’m wondering if there is maximum number of cohorts. I mean you noted you may do 5, you may do more. Is there a maximum number that you would undertake at this point and I guess, on a related note do you plan on completing all 14 day combination cohorts before making any disclosure of results.
Dan Welch
Yes, our general approach notwithstanding our commitments that we have made to make a communication in this quarter is to communicate the results when the work is done as we did with the monotherapy multiple ascending dose we didn’t make any communication until all the cohorts were done and that would be same case here. If for some reason we wanted to explore further to understand any aspect of 191 in triple combination beyond the number of cohorts we felt to get our essential answer, we may communicate on the work that is done at that moment to fulfill the commitment that we made at the – for the fourth quarter. For example, so that is one circumstance where we might communicate on the results, even though all cohorts are not yet completed.
Adam Cutler – Canaccord Adams
Okay, and then one question on pirfenidone if I may, I’m just wondering if you can walk us through the remaining steps between now and disclosing the data and you know, the kind of rough time lines for each.
Dan Welch
Yes. I can start of giving way very broad looks, Bill Bradford, of course will be much – is much closer to it and can provide some additional detail to the extent we can. So, I just want to emphasize the key point for all of you to recognize is that the last patient showed up their assigned visit of their last visit essentially right around now. So, in terms of the patient visit aspect of the 2 capacity studies that is done. So the clock has just begun now you might think. There is a huge amount of work, keep in mind that are about 800 patients, 110 sites, forget how many different countries around the world, two different studies and 6 patients with very big files on each of them and – so, it is a massive amount of work and to get from here to reporting top line results in January or February is going to be a major undertaking, which we have just recently embarked on. So, those are the broad strokes. I don’t know Bill you want to add anything.
Bill Bradford
And I think you guys are probably familiar with the drill, the patient visits are over. So now we are getting data in-house. (inaudible) that data resulting in (inaudible) finally locking the data base at the end of the day and generating papers. And I wish that we have a couple of holidays in a week in US on the horizon here in the middle of that process. So, lot of work to be done. I will offer that in addition to all the things Dan has mentioned. We also – we have a large number of efficacy assessments in this study as well, which just results in that much more data and that needs to be put through the process.
Adam Cutler – Canaccord Adams
Okay, great. Thanks a lot.
Dan Welch
You are welcome.
Operator
Our question comes from the line of Jason Kolbert with Susquehanna International. Your line is open.
Jason Kolbert – Susquehanna International
Hi, thank you guys. It was great seeing you at ASLD. I like to switch gears a little bit and ask you a couple of question about pirfenidone, when you look out to the Shionogi experience do you have any insight into what they are thinking in terms of the market sizes in Japan given the size and what the size of the IPF market is in Japan as a surrogate to what you might be looking at in the US?
Dan Welch
Yes, to the best of our knowledge the incidence of IPF is on par with that of the US and Europe. But that is an educated guess. Epidemiological studies that have been done in the past have not touched on Japan. So they have generally been in US and Western Europe based. So, it is somewhat of a guess. It is an educated guess, but on a proportional basis Japan would have the same amount of IPF patients per capita. That said I think the IPF market in Japan is somewhat less mature than it is in U.S. and Europe for couple of reasons. Number one, a lot of the work InterMune has done in the past to develop – on developing the first Actimmune and IPF Phase 3 study is a big study before that. There has already been 1100 patients excluding capacity and those studies for both capacity or program’s capacity and INSPIRE were done predominantly in the US and in Western Europe. They were not done in Japan, only maybe 400 patients total I think have been studied in Japan. So that whole marketplace is less mature. The pricing we can anticipate will be very significantly less than what we would expect to see in the U.S. and Europe. So I would encourage you to think about much lower pricing and probably lower number of patients and perhaps penetration rates lower I think slower than you would expect to see in the U.S. and Europe because the whole referral network is less mature. The number of key opinion leaders who are integrated into the healthcare system and IPF clinical study also less mature. So for those reasons I think we want to – we think we should set those expectations for Japan. So those are the things we think you should think about.
Jason Kolbert – Susquehanna International
Thank you Dan. that is really helpful. Just a couple of other questions now in terms of kind of thinking about and I have some questions about what you’re thinking in terms of the timing of the sales force and how big the sales force might be. But before we get to those in terms of the database I know when I saw you at ASLD, you are still talking and seemed very confident about a February data release and so what can we assume from those kind of statements. When do you think the database will be locked and how long do you think the analysis is going to take and when do you think you’d be in a position pending good results to actually submit.
Dan Welch
So, just to clarify Jason we have been – our communication as to the timing for the CAPACITY results, top line results is January or February.
Jason Kolbert – Susquehanna International
Okay, thank you.
Dan Welch
That is the first point. Second, we’re not giving any details as to when the data base will be locked. We of course have our calendar, the date by which we expect it to be but we’re not sharing that level of detail. So let us just say we have shared the top line results of January and February. We do expect to be submitting our NDA around the middle of 2009 and we would expect to get the appropriate rapid review and approval should the file meet the standards around the end of 2009, may be early 2010. And so that is the rough timing. Europe would be 3 to 6 months thereafter. We would obviously work hard to make it only a few months thereafter but that is kind of the range we have in mind.
Jason Kolbert – Susquehanna International
And when we talk about Europe what would be the sales and expansion plans when you start thinking about the European continent. I know that you guys have good relationships with you know, the key opinion leaders in the United States. Do you feel like you could do Europe yourself or would you look to license or partner there?
Dan Welch
Yes, it is an excellent question. In the united steel states we feel very comfortable. Our ability to field the sales force. It would probably be in the range, let us call it total field deployment would be about 100. That would include sales representatives, their managers, medical science liaisons, and managed care, field based managed care personnel. So, total of around 100. In the United, sorry in Europe the number would be similar. We have been working hard sizing and scaling a European organization that would be focused on the so called big five European countries and then managing the other countries through those big five and that is in the – the field force is probably more in the range of 120, 130 because of the inefficiencies of the multiple countries. And we’re going through a process now in fact of doing the economic analysis of partner versus going alone and obviously a product with that would be targeted to relatively few doctors. We think it would be relatively high priced medicine. The infrastructure would be relatively low as to the total gross sales. So figuring out a partner deal versus the go alone costs and profits there from, is the essence of an economic analysis that we are conducting at this time. As you can imagine the terms would have to be extremely rich to not have us do it alone.
Jason Kolbert – Susquehanna International
Terrific. Thank you very much. One last question kind of now slipping back to ITMN-191, what would be the next data release that we should really be focusing on is that the last cohort in utility and HCV experience patients?
Dan Welch
I’m sorry I didn’t catch the first part of your question?
Jason Kolbert – Susquehanna International
So what would be the – what is really the next data event that we should focus on around ITMN-191, it is really of significance for everyone.
Dan Welch
Well the next one would be the top line results from this ongoing triple combination study. Looking beyond that it, it would be the initiation of the Phase 2b study. We haven’t remarked on that yet we probably will say something on that in the not too distant future as to the timing by which we would expect to start that program. We're looking at and studying obviously as you can tell from our in vitro work combinations of direct antivirals and that is obviously an area of very high interest among key opinion leaders and obviously between Roche and ourselves. So those are some things to think about.
Jason Kolbert – Susquehanna International
Great. Exiting times for sure.
Dan Welch
Indeed. Thank you for your interest.
Operator
Our next question comes from the line of Liisa Bayko with JMP Securities. Your line is open.
Liisa Bayko – JMP Securities
Hi, can you maybe give us a little more detail on how many of the patients. I know you said the vast majority have enrolled into the open label continuation steady of CAPACITY, the recap trial.
Dan Welch
Yes, we haven’t given a figure on that partly before of host of reasons. But I can say the vast, vast majority to be more clear, it is virtually all of the patients have volunteered to enroll themselves or have themselves enrolled into the follow on program we called recap. And that most people would see that as a very encouraging sign for pirfenidone but we can’t take that observation too far.
Liisa Bayko – JMP Securities
Okay, and then I just have one final question. Can you may be describe any detail confidence or insights or anything like that from pirfenidone being approved by – in Japan?
Dan Welch
Well, we of course have been previewed to those data. meaning the Phase 3 data and of course the Phase 2 data for quite some time. We have been working with the Phase 3 data for example since the first quarter of 2007 and so we were not surprised based upon our full knowledge and understanding of those data, both the efficacy and the safety profile. We were not surprised that pirfenidone was approved. Individuals outside like yourself outside of the company who did not have insight into those data, I think can draw some comfort from the fact that an independent and unbiased agency who has the interest you of their citizenry in mind has reviewed those data and approved it for consumption by their patients. So, I think that could bring or should bring some level of comfort to those outside of InterMune and Shionogi, that those data supported a strong risk benefit ratio. So I think that we can draw. The other thing Japanese authorities have a reputation for being extremely tough on safety and the fact that the drug was approved and approved in a rather good way in terms of its prescribing information I think is also a good strong support of pirfenidone’s risk benefit profile.
Liisa Bayko – JMP Securities
Okay, and then actually just one final question. I know you are continuing to take both the bid and the tid for today’s 2b, but you know, you may sort of quantitate for us how confident you are on (inaudible) that this will be ultimately be a twice daily drug?
Dan Welch
Yes, I think what you need to do is kind of look at what all the companies are doing with their direct antiviral compounds at least the protease inhibitors for example. Those who could be once a day are also studying twice a day, those who could be twice a day or also studying three times a day. And the fact that we’re studying both doesn’t necessarily mean that we don’t have confidence that we couldn’t be or should be twice a day. The nature of these studies is that they’re small, extremely small, either ten patients per cohort, the variability among or between those patients is quite large. So, you can only get strong inferences as to what a given drug with a given regime can do in a given cohort, for example. So you can get – these studies are indicative. So, we have been saying all along that through the inherent properties of 191 or in combination with standard of care or combination with other direct antivirals or – and through formulation we have lots of different ways to get there and we have – and we are – we have this level of confidence at this stage of the game that we can get there. Probably the best proof will be of course the Phase II study that shows on longer duration with larger patients more robust studies what the Q8 or Q12 regimen would do, for example, (inaudible) has data that are encouraging and indicative but of course they are doing a big study to answer that question with FBR [ph] the final arbiter of success. So, I think we can draw some conclusions and we remain with this level of confidence that one way or the other we can get there, but we won’t be totally sure until we start seeing FBR data, for example, that is the real proof.
Liisa Bayko – JMP Securities
Okay, thank you very much.
Dan Welch
You are welcome.
Operator
Our next question comes from the line of Jonathan Edwards [ph] from Leerink Swann & Company. Your line is open.
Howard Liang – Leerink Swann & Company
Hi, thanks. It is actually Howard Liang. So, I have a question regarding the start of the Phase 2b trial or Phase 2 trial, whether you are waiting for any animal toxicology studies before you can start?
Dan Welch
No, we have all of the toxicology data we need to start that study.
Howard Liang – Leerink Swann & Company
Okay, have you said how long the duration those studies had been?
Dan Welch
The only thing that we have said publicly as to the duration of tox that has been completed successfully is the 13-week two species studies, rats and monkeys.
Howard Liang – Leerink Swann & Company
Okay, great. Then in terms of increasing the dose within the current Phase 1b study, can you sort of share with us how will you make that decision, whether you need to increase the dose or not. Is it because if you increase those, because it we complete safety if we increase the dose, or is it because you want to explore further doses to test bid for example. So, how will you made that decision.
Dan Welch
Yes, probably it is an answer that won’t satisfy you but it is all of those things. It is PK, it is viral kinetics, it is safety, it is the relationship between all of those things. It is the nature of the patients we enroll and their characteristics. It is really a very dynamic almost real time type of process we go through. So it is not any one of those. It is all of those.
Howard Liang – Leerink Swann & Company
Great. Thanks very much.
Dan Welch
You are welcome.
Operator
Our last question comes from the line of Tom Russo with Robert W. Baird & Co. Your line is open.
Tom Russo – Robert W. Baird & Co.
Good afternoon. Thanks for taking the question and first since your company is closest to the IPF patient community. I’m curious what impact you think positive data in your Phase 3 program would have on other placebo control trials that are in progress. I’m thinking of it (inaudible) and I think even (inaudible) now, you know both from an ethical standpoint and also from a maybe a logistical or patient incentive standpoint.
Dan Welch
It is a great question. We recognize that this could create difficulties for the companies conducting placebo controlled studies and to the extent which patients might want to bail from those studies and get on to pirfenidone. The practical fact is that pirfenidone, for example, won’t be available even if the data are good. There are ways to make pirfenidone available in Europe for example under name patient procedures in the United States for compassionate use. But you know, the data will only come out in January or February and I guess on a practical matter that might not present a huge issue to other countries doing randomized placebo controlled trails. But that said this would be the first drug that has proven itself beyond outside of the Japanese data where pirfenidone was proven to have a meaningful and positive impact on IPF patients and there is no drug approved. So we will know it when we see it. It could be a dramatic impact but practicality is the drug won’t be immediately available outside of pirfenidone – outside of Japan.
Tom Russo – Robert W. Baird & Co.
Okay, and then also curious if you haven’t already done this. At what point do you kind of try to canvass the country broadly and actually start to identify specific patients for future treatment with pirfenidone?
Dan Welch
Well, we have two of our studies INSPIRE with Actimmune and also (inaudible) before that and then our two CAPACITY studies, all of which have been done in US and Europe. We have already a very robust referral network through the investigators and the key opinion leaders. So, that already exists in the whole network that are referring patients into that clinical trial network. It is a very active patient efficacy group there are – there is a coalition for pulmonary fibrosis. There is a whole host of patient oriented advocacy groups. I think there will be – I think from that what we know especially in the United States is that the IP of patients are generally well informed. They are very savvy. They track developments in the IPF world. Upon announcement of positive pirfenidone results, I think – I don’t think that is going to be big issue in terms of identifying patients, I think they will make themselves known.
Tom Russo – Robert W. Baird & Co.
Okay, thanks very much.
Dan Welch
You are welcome.
Operator
(Operator instructions) We have no further questions at this time.
Dan Welch
Thank you operator. And we thank you all – and we thank all of you who joined the call. And we look forward to our next regularly scheduled call to discuss year end 2008 financial results. Good afternoon.
Operator
This concludes our call for today. You may now disconnect your lines.
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