Achillion Pharmaceuticals Management Discusses Q4 2012 Results - Earnings Call Transcript

Achillion Pharmaceuticals (NASDAQ:ACHN)

Q4 2012 Earnings Call

February 20, 2013 5:00 pm ET

Executives

Glenn Schulman - Director of Investor Relations

Michael D. Kishbauch - Chief Executive Officer, President and Director

Milind S. Deshpande - Chief Scientific Officer and President of Research & Development

Mary Kay Fenton - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Secretary

Analysts

Alethia Young - Deutsche Bank AG, Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Liisa A. Bayko - JMP Securities LLC, Research Division

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Matthew Harrison - UBS Investment Bank, Research Division

Brian P. Skorney - Robert W. Baird & Co. Incorporated, Research Division

Nathan Cali - Noble Financial Group, Inc., Research Division

Jason Kolbert - Maxim Group LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Achillion Pharmaceuticals Fourth Quarter Year-End 2012 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Dr. Glenn Schulman, Senior Director, Investor Relations. Please begin.

Glenn Schulman

Thanks, Cecilia, and good afternoon, everyone. Thanks for joining us today as we review Achillion's 2012 financial results and provide an update on our pipeline of HCV compounds. Hopefully everyone received a copy of this afternoon's earnings press release, detailing the full year 2012 financial results and the guidance for 2013. If you have not received this news release, or would like to be added to our distribution list, please feel free to call or e-mail me in the office at (203) 752-5510 after the call. This news release is also available from our website at www.achillion.com.

In addition to announcing our fourth quarter and full year results this evening, we also announced the details of our proposed common stock offerings. As the result of the financing and the legal constraints of the process, the prepared remarks in discussion on today's call will be necessarily limited to our 2012 results and 2013 outlook. If you have additional questions related to the filings, I refer you to the prospectus supplement related to the offering that we filed with the SEC this afternoon.

On the call this evening, we'll have a brief presentation from senior management, followed by a Q&A session.

Joining me on the call this afternoon from Achillion are Mike Kishbauch, President and Chief Executive Officer; Dr. Milind Deshpande, President of Research and Development, and Chief Scientific Officer; Gautam Shah, Executive Vice President and Chief Compliance Officer; Mary Kay Fenton, Senior Vice President and Chief Financial Officer; and Joe Truitt, Senior Vice President of Business Development and Chief Commercial Officer.

Before we begin, I'd like to caution everyone that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties, including statements regarding the potential benefits of the company's lead development programs, clinical development timelines for those programs, financial guidance and the operations and future results of Achillion. I encourage you to review the company's past and future filings with the Securities and Exchange Commission, including without limitation the company's Form 10-K, which was filed this afternoon, which identifies important risk factors that may cause actual results or events to materially differ from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, February 20, 2013, and Achillion undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

Now with all that, I'd like to turn the call over to Mike Kishbauch, President and CEO of Achillion.

Michael D. Kishbauch

Thanks, Glenn. Thanks for joining us this afternoon. Our goal for this afternoon's earnings call is to update you on our progress and key developments at Achillion with a focus on the evolving results from our trial number 005, which combines our NS5A inhibitor ACH-3102, with ribavirin alone. We will also provide an update on plans for the initiation of a second oral DAA combos sovaprevir Plus 3102, whose plans we are in fact currently finalizing.

It is important to note that, as Dr. Schulman observed, we will not be making any statements at this time, specifically about the common stock offering that was also announced this afternoon, not owing, of course, to any lack of excitement or enthusiasm on our part, but solely based on the legal constraints around the offering rules.

So as background, I'd like to take you back to the company's R&D Analyst Day convened in New York last September. At that event, we outlined an updated strategy and positioning from moving Achillion through what has become its primary focus the hepatitis C market. Specifically, we detailed the strategy built on 3 pillars; the central pillar in the strategy and one we referred to as the base case. As built around the therapeutic combination of our protease inhibitor sovaprevir, formally ACH-1625, with our NS5A inhibitor, ACH-3102, a combination we believe has the potential to allow us to compete effectively against any regimen in any genotype and anywhere around the world.

At the R&D Day and continuing forward, sovaprevir with peg/riba has solidified SVR in the 80-plus percent range, with safety and tolerability unsurpassed among protease inhibitors to date and with no hints of resistance on treatment to date, while 3102 has advanced significantly with solid proof-of-concept results after a single dose, again, not a single daily dose, but a single sole dose and increasingly provocative results from the previously mentioned novel 12-week trial with ribavirin only, for the treatment of genotype 1b HCV.

The second pillar of the updated strategy we outlined is what we called the value added component, in which we intend to pursue special populations, in some cases, difficult to treat populations, that approved problematic for other regimens. We defend our own compound portfolio, while at the same time, seeking to combine our agents with those in other companies, mostly evaluating nucs, non-nucs and psycho fill-ins via cooperative study ranges.

Since then, our next-generation protease inhibitor, ACH-2684, has returned results in a cirrhotic patient population undiminished versus non-cirrhotics, while we continue to advance discussions with other parties about a variety of possible external study collaborations.

Finally, at the September event, we announced the bold initiative as the third strategic pillar, one we referred to as the upside case, in which we proposed to pursue ACH-3102 as a single DAA in combination with ribavirin alone, based on 3102's differentiated emerging profile. We believed the further we could push that simple combination forward to positive results without viral breakthrough or resistance, the more disruptive that technology could become.

And at this point, it appears the upside case has become a potential reality, in that a 12-week trial in 8 genotype 1b CC patients has produced not only some of the sharpest viral reduction curves seen to date among any agent in 6 of the 8 patients, but SVR4 -- sorry, SVR4 and the first 3 patients to cross the finish line, curves that are still dropping in the other 2 patients who didn't reach RVR4 at week 4 -- RVR at week 4, but had extraordinarily complex mutation profiles at baseline and have already dropped approximately 4.5 logs from initiation and all that without any hint of breakthrough resistance among any of the patients treated so far.

So stepping back from this 3 pillar strategy as outlined at the R&D Day, we've arrived at a point where we have 12-week safety and efficacy data on 2 promising compounds, one of those compounds, the sovaprevir protease inhibitor, can make a solid incremental cases best-in-class among proteases, while the other agent, 3102, is simply strikingly differentiated among the [indiscernible] NS5As.

Beyond that, our active dialogue with the regulatory agencies and our understanding of the regulatory environment, along with the good safety and efficacy profile of our compounds, has allowed us to advance our programs in an expeditious manner, to the point where we are now able to go ahead and initiate our sovaprevir 3102 12-week combo trial as updated last week.

So summing it all up, we believe it's not hyperbole at this point to say that we think Achillion has emerged as 1 of the 5 most important companies in HCV development today. Case can easily be made, we believe, for top 3, with the others all being large household names in contrast to this modestly sized company up here in New Haven, Connecticut. This, of course, puts us in an interesting position as regards to upside potential for the company and its shareholders.

At the same time, however, this evolution confers upon us an obligation to support this promising pipeline in the best interest of HCV patients, as well as the employees and shareholders of this company. Said in other way, to treat this pipeline the way our larger competitors would have if they had the opportunity to advance the pipeline with this kind of potential.

So over the balance of this agenda, we'll aim to do through 3 things. Number one, our Chief Science Officer, Dr. Milind Deshpande, will provide a brief update data-wise on our evolving pipeline, again with the focus on the 3102 ribavirin trial, which has now enhanced the horsepower realistically on all 3 pillars of our R&D Day strategy.

Number two, our CFO, Mary Kay Fenton, will give you a little more in the way of specifics regarding our 2012 financial results and our projected 2013 guidance.

And then number three, after some wrap-up remarks, we'll open it up to your questions about anything you feel needs more discussion with the exception of specific discussion about the offering announced earlier today, which again, will be handled separate from this call. So Milind, can we begin with the science?

Milind S. Deshpande

Thank you, Mike, and thank you, all, for joining us on the call today. I want to take a few moments to provide everyone with a recap of our Achillion programs and the data that we recently recorded on ACH-3102.

As many of you are aware, and as we detailed at the R&D Day last September, we are very excited about ACH-3102. The pre-clinical profile we have previously detailed shows that this is differentiated in its 5a inhibitor with attributes that we are fully exploring in our current Phase II trial. In that study, we are evaluating 12 weeks of ACH-3102 and ribavirin for patients with treatment-naive genotype 1b HCV. The first part of this study was fully enrolled in December and included a total of 8 patients with IL28B CC genotype 1b HCV subjects.

In January, we provided top line interim results from this unblinded study and provided an update last week at the Leerink Conference that showed that a total of 6 out of 8 patients achieved RVR. The 3 patients that have previously completed 12 weeks of therapy have now achieved SVR4. And to date, there has been no virologic breakthrough or virologic rebound after cessation of treatment.

ACH-3102 has been safe and well tolerated to date, and we are now planning to submit complete results from this study for a later presentation that would take place in the second quarter.

We are also planning to expand this trial in the second quarter to enroll an additional 8 subjects with any IL28B subtype and look forward to reporting out results, including RVR in the third quarter.

When we initiated this trial, we had 3 questions we wanted to answer. The first is, is 3102 safe and well tolerated? And to date, the answer is, yes, in 12 weeks of dosing. Second, does ACH-3102 have a hard barrier to resistance? And based upon lack of model breakthrough and continued model suppression in presence of multiple resistant radiants, we believe the answer is also, yes. ACH-3102 continues to suppress virus in patients without any virologic breakthrough seen to date. Even in the case of one patient who has asthma, and he has 6 mutations at baseline that confer high level of resistance to prior generation NS5A inhibitors.

The last question we wanted to answer is whether ACH-3102 could provide the backbone for a simple 12-week regimen for treatment of genotype 1b. The answer to this question appears, yes. And as we continue to follow this initial patients and the additional patients we plan to enroll next quarter, we believe that ACH-3102 plus ribavirin could be a very competitive regimen for the treatment of genotype 1b.

As Mike mentioned in his opening remarks, the ACH-3102 and ribavirin study in our case represents an upside scenario, but we are also working to initiate our base case Phase II trial, evaluating 12 weeks of sovaprevir with ACH-3102 and ribavirin, in the treatment of genotype 1 HCV, including both genotype 1a and 1b patients. This study is expected to begin dosing the second quarter and ends to enroll approximately 30 to 50 patients, evaluating sovaprevir at a dose of either 200 or 400 milligrams daily, in combination with 50 milligrams of ACH-3102 and weight-based ribavirin.

We plan to provide internal results from this study, including RVR in the third quarter. With that brief review, I'd like to turn it over to Mary Kay for a review of our annual results after this we will take your questions.

Mary Kay Fenton

Thanks, Milind, and good evening, everyone, thanks for joining us. As you know, this afternoon, we announced earnings for both the fourth quarter and the year ended December 31, 2012. In that announcement, we reported a net loss of $11.2 million for the 3 months ended December 31 and $47.1 million for the year that ended.

Research & Development expenses were $8.4 million in the fourth quarter and -- or $39 million on an annual basis increased from the same period in 2011, resulting from increased personnel levels of the company, as well as an increase in clinical trial costs associated with the development of sovaprevir ACH-3102, offset somewhat by decreasing cost and expenses associated with ACH-2684.

Revenue for the year was $2.6 million compared to $247,000 during 2011. The primary driver for the increase in revenue was the recognition in the first quarter of $2.5 million of deferred revenue under our formal collaboration with Gilead Sciences.

We ended 2012 with $77.4 million in cash and cash equivalents. Looking forward to the remainder of 2013, we're planning for operating cash use that averages approximately $12 million per quarter, an increase of about 20% over our 2012 historical cash burn.

As we move into the next 12 months and beyond, we expected R&D expense will similarly expand by approximately 20% as we advance both our 2 DAA combinations in more robustly sized Phase IIb clinical trials.

Our net loss per share for 2013 is anticipated to be approximately $0.75 per share based upon currently outstanding shares. Mike?

Michael D. Kishbauch

Thanks again for your attention. This is Mike Kishbauch again. And at this point, I'll turn it back to the operator who will open things up for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from Alethia Young of Deutsche Bank.

Alethia Young - Deutsche Bank AG, Research Division

So 2 questions. One, you guys have had some pretty interesting 1 BCC patients going into this trial, based on mutations. I just want to kind of think about any read-throughs or insights as you think about non-genotype 1 patients and similarity and based upon mutations as we think about kind of non-genotypic, pan-genotypic coverage of your NS5A? And then the second question is really, we're starting to learn about pivotal studies and the gaps we may see in some of the coverage in the hep C regimens, and I just want to think about how, with your upside value add scenarios, like what kind of other additional and incremental trials might be interesting to explore here.

Milind S. Deshpande

I'll answer the question first regarding different genotypes. Based on all the applicant data that we have for ACH-3102, what we see is that ACH-3102 retains excellent potency against genotypes 2, 3 and 4. We have looked at different applicants that were cleared, not only from the laboratory-based HCV RNAs, but also from HCV RNA samples that were taken from patients infected with HCV. And in all these different assays, we see good activity of ACH-3102 against all other genotypes. So our plan is to evaluate the activity of 3102 against these different genotypes, and both studies will start towards the end of this year. In terms of the other trials that we will undertake in other types of patient populations, the key patient populations that we are thinking of are patients that have cirrhosis and patients that have HIV HCV co-infections. So these are the 2 segments or 2 patient populations that we are very much interested in, in evaluating the combination of either 3102 ribavirin or a combination of sovaprevir plus 3102 plus ribavirin.

Alethia Young - Deutsche Bank AG, Research Division

So just a quick follow-up there. So based on kind of what you're now learning about kind of a profile, are there any other populations or anything else that you might want to be more opportunistic with on your NS5A now that you're kind of getting a flavor for the assets?

Milind S. Deshpande

Yes, one patient population I think where 3102 will serve well aside from the cirrhotic and HIV HCV co-infected patient population that we talked about is patients -- transplant subjects. And the reason for that is multiple-fold. First of all, the potency of ACH-3102 I think is good. It provides a high level of resistance. Second important characteristics of 3102 is the long half-life, which I think will play well in HCV transplant patients. And the third characteristic is that 3102 for its uptake in the liver does not rely on any transport mechanisms. We have looked at uptake of 3102 in parasites and a majority of the drug is taken up into the liver through passive transfer. There is no active transfer that is required for uptake of 3102 in the liver. Going back to our question of looking at the activity of 3102 in other genotypes, I think based on some recent data that came out for activity of non-interferon continue regimens in genotypes 2 and 3, I think there is an opportunity for new DAAs to address, especially patients that have cirrhosis in genotypes 2 and 3. So we will be exploring that with ACH-3102 as well.

Operator

The next question is from Rachel McMinn of Bank of America.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

A couple of questions. Milind, just given the very long half-life of 3102, I'm wondering if you can say anything more about the PK profile in patients who've had -- who've been dosed with the drug for a long period of time, up to 12 weeks. And then I also wanted to better understand, I mean I know that you've just gotten clearance from the FDA to view the combination study with the protease inhibitor, but is the reason why you're going in such a small number of patients initially because the FDA really wants to see more dosing work done before they allow expansion? Or is it a financial decision primarily that's allowing you to do just relatively small before you go into the Phase IIb later this year?

Milind S. Deshpande

So let me answer the question about the half-life of ACH-3102. Couple of things to highlight. The half-life of -- the terminal half-life of ACH-3102 is quite long. We believe that the terminal half-life is around 250 hours. Having said that, the elimination half-life of ACH-3102 is probably in the range of 20 to 25 hours. So most of the drug after you stopped treatment is eliminated from the body and then most likely it's a slow leakage of 3102 from tissues that contributes to the long elimination half-life. In terms of what we have seen in the 12-week trial that is currently ongoing, we do not have the PK data yet. We will have the pharmacokinetic characteristics of 3102 after prolonged dosing in this trial, once all patients have completed 12 weeks of dosing. So I can't answer the question in terms of what exposures we are seeing after 12 weeks -- or during 12 weeks of dosing. But we have dosed ACH-3102 for 14 days and what we see is that it takes about 10 days for 3102 to reach a steady state. And after that, the concentrations or the drop concentrations that we see are fairly steady.

Michael D. Kishbauch

And then there's the second question...

Rachel L. McMinn - BofA Merrill Lynch, Research Division

And then the size of the Phase II, Mr. Kishbauch?

Milind S. Deshpande

Yes. So the size of the Phase II trial is that we will undertake with ACH-3102 sovaprevir and ribavirin, the size of that study is mainly historic in a small patient population. Even though we will have 12 weeks of safety data with 3102 and we already have 12 weeks of safety data with sovaprevir. We wanted to make sure that we see good efficacy as well as in safety in this patient population before we move to a larger study. So the answer is not financial, but I think it was a scientific decision.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Scientific, but if the FDA didn't prevent you from going into a bigger population?

Milind S. Deshpande

No, since this is a first trial, we made the proposal to the FDA that the study, the one that we have and the FDA accepted the study design. So it was a really hard decision to propose the study design as we did.

Operator

The next question is from Brian Abrahams of Wells Fargo Securities.

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

I guess a follow-up to Rachel's question. On the 3102 sovaprevir combo. I'm sort of wondering what are you looking for with respect to the extent of data from the Phase IIa combo to move into a larger Phase IIb? Are there ways that you could potentially accelerate that transition to a larger study and adapt the design, for instance, or using the same sites?

Milind S. Deshpande

Yes, so there are a couple of things that we are doing. First of all, what we will get from this pilot study is we will be able to compare the SVR rates with the 2 different dosing regimens that we are looking for with sovaprevir. I think based on the emerging data from this trial, we intend to start a larger trial to better understand the virology, as well as safety, and that trial will be in about 60 to 80 patients.

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Okay. And then maybe I misheard this, but, Milind, did you say that you were looking at the 50 mg dose of 3102, and not the 75 mg dose, or will both be explored in this upcoming combo study?

Milind S. Deshpande

So the first segment that we are exploring in the sovaprevir 3102 plus ribavirin study, we are exploring 150-milligram loading dose of 3102 and a 50-milligram maintenance dose. So day one will be 150 milligrams, followed by 50 milligrams for the rest of the treatment duration.

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

And what's the rationale for using that slightly different dose versus including also the 225, 75 that you're looking in the riba study?

Milind S. Deshpande

The rationale is we did look at the virologic response and the activity of 3102 that we're seeing in the 3102 plus ribavirin study, we had adjusted our PK/PD models based on that. And also did a lot of viral kinetic modeling based on the Phase I data that we had for sovaprevir and ACH-3102.

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Great.

Milind S. Deshpande

The outcome of that was we think that a 50-milligram dose of 3102 in combination with sovaprevir will provide us high viral clearance.

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Got it. I just wanted to make sure there wasn't anything new with respect to safety or drug interactions that you guys had found.

Milind S. Deshpande

Just to elaborate on the drug interactions study, obviously, we explore the highest anticipated concentrations of each of the drug, and at those concentrations, we did not see any viral kinetic interactions. So the choice of selection of 50 milligrams was not dependent on -- there was nothing in the drug interactions study. And as both Mike and I have indicated, the Phase II study that is currently ongoing with 3102 and ribavirin, 3102 has been very well tolerated. And so far, no safety issues here.

Operator

The next question is from Liisa Bayko of JMP Securities.

Liisa A. Bayko - JMP Securities LLC, Research Division

I just wanted to understand a little bit more about what you've learned about the 2 patients that didn't reached undetectable? And is there anything that you've learned about those patients that makes you feel confident that now adding the protease inhibitor will result in a more complete suppression?

Milind S. Deshpande

Well, that's a good question. And let me walk you through the genotypic and phenotypic analysis that we have done so far for both those subjects. I will start with what we refer to as subject F. This subject to date continues to have reduction in HCV RNA. We have data through week 8. This subject came in at a baseline viral load which allows 6.2 logs RUs per minute. And at PK, this subject has HCV RNA, which is around 225 RUs per minute. So significant reduction in HCV RNA, and what we were really interested in knowing is that why the viral response of the slope of HCV RNA decline so shallow as compared to the other 6 patients who are responding really well. We now have completed baseline sequencing, population sequencing, as well as clonal sequencing for this particular subject. And we also now have clonal sequencing data at weeks 1 and 2. So I'll walk you through the baseline sequencing first, but direct sequencing, what we see is that this patient has 100% mutation act, position 31. So we see L31 M mutation at 100%. We also see the Y93 H mutation at 100%. Aside from these 2 mutations, there are 4 other mutations that were determined by direct sequencing. And those mutations are R32, F37L, Q54H and P64S, and all these mutations are also present at high percentages. When we completed the clonal sequencing at baseline, we have now cloned over 45 clones from this particular subject. And what we see is that there are many clones who have all 6 mutations in the same clone. In other words, these 6 mutations are present at baseline and these 6 mutations are linked to each other. And when we look at the sequencing at weeks 1 and 2, what we see is that all these 6 mutations are present at weeks 1 and 2. There was no new mutation that is detected at weeks 1 and 2. And so what this indicates is that, first of all, it is a very unusual situation to see 100% mutations at L31M, as well as Y93H. So these are the 2 mutations that are present at 100%. We have searched many databases to assert the preponderance of these mutations and all we can say at this point is that it is very, very uncommon to see these mutations present at baseline without prior exposure to NS5A inhibitors. And in a way, it was great to see that with 3102, we are seeing continued suppression of HCV RNA in this station. We have completed phenotypic analysis as well. And the replica on that has all 6 mutations displayed on EC50 of 2 nanomolar against ACH-3102, while daclatasvir, we had an EC50 of 184 nanomolar against the same replica and that has the 6 mutations. So again, a significant difference between potency for daclatasvir and ACH-3102 against this particular subject.

And so in summary, I believe that we are seeing continued suppression of this highly resistant virus because the drop concentrations that we see or that we are achieving with ACH-3102 exceed the EC50 of 2 nanomolar that is seen with the patient with 6 mutations. And that is the reason why we are seeing continued decrease. We are -- secondary question, how would this patient look like if he had sovaprevir or any other protease inhibitor? I think the activity would be really good. We are seeing continued suppression and I think if you have another direct acting antiviral agent, we will see very rapid decrease in HCV RNA. For the second patient, we don't have as much details. The only thing I can tell you is that this patient also has 4 mutations at baseline. And we are completing the clonal sequencing, as well as the phenotypic analysis. But in terms of using the HCV RNA from this patient and growing replicons has been more challenging. So we are trying to solve those technical issues. And we will have more information on this patient as well.

Operator

The next question is from Katherine Xu of William Blair.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

So I'm just curious for -- so Milind actually said, sort of alluded to the 7977 plus riba, there are big differences between genotype 1, genotype 3. So what would you predict from what you know about 3102?

Milind S. Deshpande

What we see, Katherine, in the replicon assay is that we don't see any change in EC50 for 3102 as compared to genotype 1. So that is the only data point that we have. And at least based on that data point, I anticipate that we would see good activity of 3102 against genotype 3.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay, and then with regard to the sovaprevir plus 3102, plus riba in this small study, so going forward, if you could decide on a dose for sovaprevir, I know you see good activity and going forward, you would drop the R? Is that the plan, bigger study expanded?

Milind S. Deshpande

That's correct, yes. So I think it's prudent that we see what the sustained viral response looks like in combination with ribavirin. And after that, evaluate just the combination of 1625 or sovaprevir and 3102.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay. So basically, it looks like for this particular combination, sovaprevir plus 3102, sovaprevir at 200 and 400 maybe is little weak against genotype 3. So I'm just wondering with the activity added from 3102 against genotype 3, will this combo be pan-genotypic? I mean do you have any modeling or ideas now?

Milind S. Deshpande

Yes, we are trying to understand the barrier to emergence of resistance in genotype 3. I think that is going to be key and the difference between doing those studies in genotype 1 replicons as compared to genotype 3 replicons. As you know, the genotype 3 replicons are not as robust and the translation of value is not as robust as what we see in genotype 1. But those experiments are ongoing.

Operator

The next question is from Matthew Harrison of UBS.

Matthew Harrison - UBS Investment Bank, Research Division

Two things I wanted to ask. The first, can you just give us a sense of what kind of baseline characteristics you're targeting for the combo study? Should we think about more 1as and 1bs? Or are you going to include cirrhotics? And then just so I'm clear on what you said earlier, we should think about a 30- to 50-patient IA -- I mean IIA study. And then a separate 60- to 80-patient IIB? Or do you mean you'll just expand to 60 to 80 patients?

Milind S. Deshpande

Regarding the patient characteristics, we intend to start the study first in the U.S. And so I think we will -- just because of the patient demographics, I would anticipate that there would be a very robust number of IA subjects that are enrolled in the initial trial that we are doing with sovaprevir and 3102. What's beyond that trial, that's right, we are doing another trial where we would be looking at 60 to 80 patients. And subsequent to that, I think depending on how the data emerges, we will decide whether we want to undertake the largest Phase II study or if that data is enough to launch into a bigger program.

Matthew Harrison - UBS Investment Bank, Research Division

Got you. And then cirrhotics, no cirrhotics in the...

Milind S. Deshpande

In the Phase II studies that we're doing, we will open it up. The enrollment of treatment of genotype 1 patients with or without compensated cirrhosis.

Operator

The next question is from Brian Skorney of RW. Baird.

Brian P. Skorney - Robert W. Baird & Co. Incorporated, Research Division

I just kind of jumping on Matt's question. What exactly are you looking for data-wise from the initial study to move into the other study of 60, 80 patients? Is this going to be an on treatment effect, or do you actually wait for SVR follow-up to give confidence in terms of what the arms should like in the 60- to 80-patient study?

Milind S. Deshpande

What we will be looking in the initial study, Brian, are the standard endpoints. Obviously, this is the first study where we are doing for the combination of sovaprevir and 3102. So we will be looking at safety and efficacy. In terms of efficacy, what I would be most interested in is the virologic response because to a large extent, that tells you -- gives you a lot of information regarding the treatment duration, as well as the potency of the -- of the combination regimen. We'll be looking at RVR end of treatment and SVR4 as the key virologic endpoints. And next study that we are planning on doing would start as soon as we receive the data from the first week from the ongoing -- or the 1625 3102 study.

Brian P. Skorney - Robert W. Baird & Co. Incorporated, Research Division

Sorry, you said, which data point from the combo study to similar to the 60- to 80-patient study?

Milind S. Deshpande

SVR4.

Operator

The next question is from Nathan Cali of Noble Financial.

Nathan Cali - Noble Financial Group, Inc., Research Division

Sorry, if this was already answered. Could you just repeat what the dosing regimen is going to be with sovaprevir and ACH-3102 for the combo study?

Milind S. Deshpande

Yes. So let me walk you through the trial. What we would be looking at in that trial are the 2 groups that we are evaluating. The first group will be our 200 milligrams of sovaprevir plus 50 milligrams of 3102 and weight-based ribavirin. And the second group will be 400 milligrams of 1625, plus 50 milligrams of 3102 and weight-based ribavirin. Each of these groups will have a loading dose of 3102, which is 150 milligrams, which will be administered on Day 1.

Nathan Cali - Noble Financial Group, Inc., Research Division

And I'm sorry if you said this already, again how many patients will that be initially?

Milind S. Deshpande

The total number of patients that we intend to enroll in that trial is 30 to 50 -- 30 to 40.

Operator

The next question is from Jason Kolbert of Maxim.

Jason Kolbert - Maxim Group LLC, Research Division

I understand the strategy to both strengthen the balance sheet as you move clinicals forward. Can you talk a little bit about the strategy to strengthen the management team? I mean I know, Mike, it's very strong. Milind, you're great. Can you talk a little bit about whether there is an opportunity here now to bring on a Chief Medical Officer and then eye towards commercialization?

Michael D. Kishbauch

Yes, there is an opportunity and a plan to do so, Jason. And I will just invite you to sit tight on that. And right now, we are not suffering any growing pains with the possible exception that my friend to the left here is probably having just about as much fun as he can stand, but he's doing a marvelous job. We have a clinical group that is actually been fortified over the recent past, both at the M.D. level and in a lot of the supporting functions as well. So we aren't missing a beat, but as you can well imagine for a variety of purposes, a Chief Medical Officer is in the offing for us.

Operator

There are no further questions in the queue at this time. I'll turn the call back over to Mike for closing remarks.

Michael D. Kishbauch

Very good. I think we'll close it up at this point, and thank you, one and all, for tuning in. In summary, we're pretty excited about a busy 2013, with clinical trial results for the various HCV programs, including more 3102 ribavirin data in the second quarter and combo data versus sovaprevir 3102 beginning during the summer of the year. Thanks very much for joining us and good evening to you all.

Operator

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.

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