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Optimer Pharmaceuticals, Inc. (NASDAQ:OPTR)

Q4 2008 Earnings Call

March 11, 2009 4:30 pm ET

Executives

Christina Donaghy – Corporate Communications Manager

Michael N. Chang, Ph.D. – President & Chief Executive Officer

John D. Prunty – Chief Financial Officer and Vice President of Finance

Kevin P. Poulos – Chief Commercial Officer

Sherwood Gorbach – Chief Medical Officer

Dr. Tessie Che – Chief Operating Officer

Dr. Xavier Frapaise – Chief Scientific Officer

Analysts

Allen Carr – Needham & Company

Eun Yang – Jefferies and Company

Thomas Wei – Piper Jaffray

Brian Skorney – Thinkequity

John Newman – Oppenheimer

Liisa Bayko – JMP Securities

Tom Russo – Robert W. Baird

Juan Sanchez – Ladenburg

Adam Cutler – Canaccord Adams

Operator

Good day ladies and gentlemen, thank you for standing by, and welcome to the Optimer Pharmaceuticals fourth quarter and year end 2008 conference call. (Operator Instructions) At this time, I’d now like to turn the call over to Chrissie Donaghy, Optimer’s Corporate Communications Manager. P

Christina Donaghy

Welcome to Optimer Pharmaceuticals’ fourth quarter and year end 2008 conference call. This call is being recorded. With us today from the company is the President and Chief Executive Officer, Michael Chang; Chief Financial Officer, John Prunty; and Chief Commercial Officer, Kevin Poulos.

Please note that this conference call will include forward looking statements regarding future events and the future financial performance of Optimer, including expected cash requirements for 2009, anticipated clinical development timelines, and regulatory submissions for our two lead product candidates, planned commercialization, marketing and partnering efforts, and projected incidents of Clostridium difficile infections, or CDI.

Because such statements deal with future events and are subject to many risks and uncertainties, actual results may differ materially from those projected in the forward looking statements. Examples of such risks and uncertainties include the cost of clinical development and the possibility of unfavorable clinical trial results, the uncertainties involved in the regulatory approval process, and the difficulties in entering into partnerships on favorable terms.

For a full discussion of these risks and uncertainties, please review Optimer’s annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as filed with the US Securities and Exchange Commission. Furthermore, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, March 21, 2009. Optimer undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. This conference call is also being webcast and will be archived on our website for 30 days after today.

Earlier today we released financial results for the fourth quarter and year ended December 31st, 2008. If you have not received this news release or if you would like to be added to the company distribution list, please visit the investor relations section of our website at www.optimerpharma.com.

I would now like to turn the call over to Michael Chang, President and CEO of Optimer Pharmaceuticals.

Michael N. Chang, Ph.D.

Thank you to call for joining us today. 2008 was a very strong year for Optimer, and despite uncertainty in the global markets, we believe we are very well positioned for further growth in 2009. Through successful execution of our clinical development programs, we’re transitioning towards the commercial phase of our maturation as a biopharmaceutical company.

To summarize some of the key highlights over the past 12 months, first we completed the Phase III clinical development program for prulifloxacin, successfully achieving the primary endpoint in our two Phase III studies. We anticipate submitting a New Drug Application for prulifloxacin to the FDA before the end of this year. Second, we released positive data from the first of two Phase III studies of fidaxomicin for the treatment of Clostrium difficile infection or CDI. The data showed the fidaxomicin produced similar cure rates with a significant improvement in recurrence rates. This was compared to the only treatment for CDI currently approved by the FDA. Based on this single study, we plan to apply for market approval in Europe. We will complete the second phase III study this year before submitting an NDA to the FDA.

Third, we strengthened the financial stability of the company by successfully raising $48 million over the past 12 months through two equity financings. Finally, we appointed Dr. Francois-Xavier Frapaise as our Senior VP and Chief Scientific Officer. Xavier will lead our clinical and preclinical drug discovery program. We will touch on these highlights and more later on.

Now, to discuss our fourth quarter and full year 2008 financials, I will turn over the call to John Prunty, Optimer’s Chief Financial Officer.

John D. Prunty

I’ll provide a financial review of the company for the fourth quarter and full year for 2008 in addition to providing guidance on our expected 2009 cash burn. We reported a net loss for the three months ended December 31st, 2008, of $10.4 million or $0.35 per common share, as compared to a net loss of $7 million or $0.27 per share for the same period in 2007. We reported a net loss for the year ended December 31st, 2008, of $35.6 million, or $1.24 per common share, as compared to a net loss of $46.1 million or $2.12 per share for 2007.

The decrease of $10.5 million was due primarily to a 2007 expense related to a $20 million payment to Parr Pharmaceutical to regain the rights to fidaxomicin in North America, and that decrease was partially offset by an increase in expenses in 2008 related to the fidaxomicin and prulifloxacin Phase III clinical trials.

Revenue for the years ended December 31, 2008 and 2007 were $1 million and $767,000 respectively. The increase of $256,000 was due primarily to an increase in revenue from a National Institute of Health grant and was partially offset by a decrease in collaboration revenue with the Natural Healthcare Company which was completed in 2007.

R&D expenses in the fourth quarter of 2008 were $8 million compared to $5.6 million in the fourth quarter of 2007. R&D expenses for the years ended December 31st, 2008 and 2007, were $29 million and $41.6 million respectively. The decrease of $12.5 million was due primarily to a 2007 expense related to the aforementioned $20 million payment to Parr. The decrease was partially offset by an increase in our 2008 expenses related to our fidaxomicin and prulifloxacin Phase III clinical trials.

Marketing expenses for the years ended December 31st, 2008 and 2007, were $2.5 million and $2 million respectively. The increase was primarily due to an increase in medical education and prelaunch marketing activities.

G&A expenses for the year ended December 31st, 2008 and 2007, were $6.7 million and $5.4 million respectively. The increase of $1.3 million was due to the increased expenses to support a public company infrastructure which included higher legal, accounting, investor relations, and compensation expenses, including $927,000 of stock compensation expense. Our stock compensation expense in 2008 represented an increase of $247,000 over the prior year.

Interest income for the years ended December 31, 2008 and 2007, was $1.6 million and $2.1 million respectively. The decrease was primarily due to lower cash and short term investment balances and lower overall interest rates. In July 2008, we raised $14.8 million in gross proceeds from a registered direct offering. As of December 31, 2008, we held cash, cash equivalents, and short term investments of $39.3 million. This does not include the $32.9 million in proceeds from a registered direct offering that we closed earlier this week.

We currently expect to use cash, cash equivalents, and short term investments of approximately $40 million to $44 million for our operating activities in 2009. Thus we would anticipate beginning 2010 with approximately $32 to $36 million in cash before taking into account any additional funds received from partnering.

With that, I will now turn the call over to Kevin Poulos, Optimer’s Chief Commercial Officer, for a review of the key strategic developments in the year as well as update on our drug programs.

Kevin Poulos

The year 2008 was an exciting year of accomplishments. We made significant progress towards achieving our mid-term strategic goals in our mission to develop and commercialize anti-infectives to treat areas with significant unmet needs.

Let’s start with our prulifloxacin program. Prulifloxacin is a novel broad-spectrum fluoroquinolone antibiotic being developed for infectious diarrhea including adult travelers. Infectious diarrhea is primarily caused by a bacterial infection which affects approximately 23 million travelers each year. Prulifloxacin has shown excellent coverage of antimicrobial against infectious disease diarrhea bacteria such as E. Coli, Salmonella, and Shigella and higher potency than existing antibiotics. Prulifloxacin has been widely used a safe and effective drug in Japan, Korea, and several European countries for the treatment for various bacterial infections including gastrointestinal, respiratory, and urinary tract infections.

Optimer acquired exclusive rights to develop and commercialize the drug in US from Nippon Shinyaku in 2004. Prulifloxacin achieved the primary endpoint of time to resolution of diarrhea in patients with traveler’s diarrhea in both Phase III trials. Patients treated with Prulifloxacin in the first trial were cured in 24 hours and 33 hours in the second trial. The duration of diarrhea was significantly shorter in the Prulifloxacin group than in the placebo group with a p-value of less than 0.0001.

On the basis of these two phase III clinical studies, we plan to submit a new drug application with the food and drug administration later this year. We believe a key commercial advantage of prulifloxacin is its convenient dosing profile. Prulifloxacin is dosed once a day for 3 days, compared to twice a day for 5 to 7 days with ciprofloxacin, the current standard therapy. We believe that the time to resolution of symptoms along with more convenient dosing with Prulifloxacin makes it a welcome new treatment for infectious diarrhea in adult travelers.

Moving on to our fidaxomicin program, formerly known as OPT-80, fidaxomicin is the first experimental drug in a new class of antibiotics called the macrocyclics. While many antibiotics aim to stop the growth of infectious bacteria, fidaxomicin induces the death of Clostridium difficile by inhibiting a bacterial enzyme called RNA polymerase. Fidaxomicin has a narrow spectrum of activity that leads to selectively eradicate soft Clostridium difficile with minimal disruption to the normal intestinal flora, leaving healthy flora unharmed which may reduce the recurrence of Clostridium difficile infection or CDI.

In the fourth quarter of 2008, we announced positive results from the first of two Phase III trials of fidaxomicin for the treatment of CDI. This study highlighted the important differentiating features of fidaxomicin, including significantly lower recurrence and higher global cure rate than Vancocin, the only FDA-approved therapy for CDI. Approximately 92% of patients in the study achieved clinical cure with fidaxomicin compared to 90% with Vancocin. Importantly, only 13% of patients in the study treated with fidaxomicin experienced disease recurrence, compared to 24% recurrence in patients treated with Vancocin. This was a 40% improvement in outcome.

In addition to these clinical benefits, fidaxomicin offers more convenient dosing compared to existing treatments. Fidaxomicin is dosed twice a day compared to both Vancocin and Metronidazole that are typically dosed 4 times a day. We recently announced plans to prepare and submit an application for marketing approval in Europe based upon the results of our first study. Once the second Phase III study is complete, we plan to prepare an NDA for market approval with the FDA. As we have worldwide rights to fidaxomicin and US rights for prulifloxacin, we currently plan to build a hospital-based sales force to market both products in the US. We believe we can successfully target prescribers for these drugs with a sales force of approximately 100 to 125 reps.

I’ll now turn it back over to Michael.

Michael Chang

As we have previously disclosed, we intent to engage a partner to commercialize fidaxomicin outside North America. We have initiated discussions with to potential partners to implement a global commercial strategy, and the interest is very high. As I mentioned earlier, we’re in an exciting transition phase for the company. 2009 is another exciting year for Optimer as we continue to move forward with the progress of our two drug candidates.

We are completing execution of our development programs, and our objectives for 2009 and beyond are shifting towards regulatory approval and commercialization. Optimer is well positioned to lead the charge in bringing anti-infective treatment to market in order to address high unmet medical needs with our fidaxomicin and prulifloxacin programs.

This now concludes our formal comments for today. In addition to John, Kevin, and myself, Dr. Sherwood Gorbach, our Chief Medical Officer; Dr. Tessie Che, our Chief Operating Officer, and Dr. Xavier Frapaise, our Chief Scientific Officer, are all here with us today and available for any questions you have. Operator, we’re now ready to open the call for questions.

Question-and-Answer Session

Operator

(Operator instructions). We will take our first question from Allen Carr with Needham.

Allen Carr – Needham

Kevin, can you tell us a bit more about the timing for setting up the marketing organization and then also your thought process on positioning fidaxomicin with and without a generic vancomycin launch?

Kevin Poulos

I’ll address the first question about the timing of building a commercial organization part of the launch. Typically, when we plan to build a sales force organization, we start recruitment about 6 months prior to launch, and typically hires happen about 3 months prior to launch, and the reason why that’s required is to do territorial planning, formulary strategy and approval, etc., and right now, as mentioned, the plan is to probably have a sales force between 100 and 125 reps to promote both products fidaxomicin and prulifloxacin in the US.

The second question about positioning fidaxomicin with or without a generic vancomycin, we believe we’re in a position of strength based upon the high unmet need of CDI and the unique characteristics of fidaxomicin with or without vancomycin generic. We still are very poised for success. We feel our strategy is to be the best in treatment for CDI, and our strategy is to continue to build that as we go forward, and many key opinion leaders in the areas of infectious diseases and gastroenterology agree with this, and we believe that obviously versus vancomycin whether it’s generic or not, we’re poised for success. We went up against the gold standard, and as you can see in our clinical trial, in our first trial, we were substantially better in recurrence and global cure and to be comparable in overall primary outcome was a great success.

As you probably know, the prescription base of vancomycin is sporadic around the world. It depends on the country, as high as maybe 20% of the prescriptions in the US and in many countries as low as 5%. So the biggest formidable competitor we see, which we are quite excited about, is taking share against metronidazole, and clearly we think metronidazole even though it has the highest prescription share, it has the worst performance of all products, and we believe we can successfully capture share at the expense of it. There has been discussion about generic vancomycin price reduction coming soon. We quite honestly believe that was imminent a long time ago. We know that ViroPharma is fighting that, but that’s really their battle, and we assumed that a generic vancomycin may or may not come. If it does come, we’re prepared. We think it’s going to have very little impact on our business based upon the quality of our product and data. If it doesn’t come, it’s an upside.

Operator

Your next question comes from the line of Eun Yang with Jefferies and Company.

Eun Yang – Jefferies and Company

John, your cash usage guidance for this year, does that exclude any kind of cash infusion from a potential partner?

John D. Prunty

In our budget, we have left the partnering out of it, just so that that’s upside, so yes, I’ve assumed when I say that the cash guidance is a burn of $40 to $44 million, that excludes any upfront payment from a partner.

Eun Yang – Jefferies and Company

My second question is on the R&D for the fourth quarter. Does that include a $5 million potential milestone payment to Parr upon successful Phase III trial?

John Prunty

Are you saying did that occur in our fourth quarter results?

Eun Yang – Jefferies & Co.

Yes.

John Prunty

No. It’s not in our fourth quarter results. The $5 million payment to Parr is owed upon the earlier to occur of a few events which primarily is a partnering agreement or a second successful Phase III trial, so that $5 million milestone payment owed to Parr would be due upon the earlier of those events. Neither of those events has occurred yet.

Eun Yang – Jefferies & Co.

Have you met with the FDA to discuss potential NDA filing based on the first trial? You seem to have that green light from the European union, so I’m just wondering whether you have met with the FDA to discuss potential filing just based on the first trial that we have seen last year.

Francois-Xavier Frapaise

Historically as you know the FDA is more reluctant to approve drugs based on a single study, so as we stated in our recent press release, we currently intent to complete the second study before submitting an NDA to the FDA for US market approval.

Eun Yang – Jefferies & Co.

Have you met the FDA after the first Phase III data?

Michael Chang

We have frequent communications, but we have not formally met to talk about that.

Operator

Your next question comes from the line of Thomas Wei with Piper Jaffray.

Thomas Wei – Piper Jaffray

Just to follow up on this regulatory question. Can you just clarify for us this decision to file in an accelerated fashion in Europe, was that based of discussions that you had with the MEA? Did they endorse this strategy to submit on a single study?

Francois-Xavier Frapaise

Well, we are meeting and we keep meeting with consultants and external advisors, and we continue to meet with national agencies, so this is an ongoing process. We believe that the data we are generating sufficiently supports our plans to prepare and file marketing authorization for our compound.

Thomas Wei – Piper Jaffray

Was it more based on the feedback from your external consultants or from the national agencies that you have been talking to?

Francois-Xavier Frapaise

We see very robust data in this trail, and we feel confident that it’s a wise strategy to file with one study.

Thomas Wei – Piper Jaffray

Is it going to be a central application to the MEA?

Francois-Xavier Frapaise

It will be.

Thomas Wei – Piper Jaffray

Can you point us in the direction of ant recent antibiotic approvals that have gone through on a single study in Europe?

Kevin P. Poulos

The only ones that have come up HIV drugs; however, from our consultants in discussions, there is reason to believe that because of unmet medical needs, we would be in a favorable position.

Thomas Wei – Piper Jaffray

Just in terms of question I think we all have asked before about secondary endpoints, at that time you hadn’t completed much additional analysis of the fidaxomicin first Phase III trial, but have you had a chance to look at endpoints like time to resolution of diarrhea? Can you at least give us some indication of whether or not it at least looks similar to the Cancocin arm?

Kevin P. Poulos

Certainly it’s not worse, in fact slightly better. We are conducting additional analyses which we will present in Helsinki. We have an approved paper in Helsinki, but they are not ready at the present time, but that’s certainly a major consideration for us.

Michael Chang

By the way, that’s the ECCMID meeting in May.

Thomas Wei – Piper Jaffray

The time to resolution of diarrhea actually looks numerically slightly better for fidaxomicin than Vancocin?

Kevin P. Poulos

Yes. That’s true, and we are currently doing the statistics on it and some refinements, but yes, that statement is correct.

Thomas Wei – Piper Jaffray

On the partnering side, can you give us an update on when you think you might be able to have a partnership signed?

John Prunty

Our expectations are partnering to be signed is end of the first half of this year.

Thomas Wei – Piper Jaffray

So mid 2009?

John Prunty

I’m sorry, the second half of 2009. I’m sorry you said partnership to be signed. We’d expect to have letters of intent at the end of first half, but partnership to be signed at the second half of this year.

Operator

Your next question comes from the line of Brian Skorney with Thinkequity.

Brian Skorney – Thinkequity

Could you give us some more granularity on what you think the timing might be for the MAA for fidaxomicin and the NDA for Prulifloxacin? Do you anticipate these being first half events or are they going to be pushed into the second half?

Michael N. Chang

We expect completion of enrollment, and we bought data for the second trial in the second half of this year. That’s for fidaxomicin.

Brian Skorney – Thinkequity

I meant for the filing for the EMEA approval for fidaxomicin and the filing for the NDA Prulifloxacin.

Michael N. Chang

For Prulifloxacin, we anticipate a filing at the end of this year or early next year the latest.

Kevin Poulos

For the fidaxomicin, the EMEA filing, we are starting the process now because we have made an announcement that we are going the expedient route, and we probably will file towards the end of the year or beginning of next year.

Brian Skorney – Thinkequity

The raise that you just did earlier this week, can you just give us some idea on the strategy behind that? Why did you raise now? It seems like you would have had enough cash to make it through the Phase III trial of fidaxomicin where potentially you might have a better inflection point.

John Prunty

Yes. Brian, you look at the timing of things, we ended the year with $39.3 million in cash, and given our guidance, say we get to June, mid year 2009 here, we are looking at about $20 million in cash at that point, which is getting kind of low, and we didn’t want to take a lot of dilution at these price levels, and so we were looking just to take enough cash to strengthen our balance sheet here as we continue with the partnering discussions, and as you say wait for the data, so we think it was a minimal amount of dilution at a reasonable price in the current market and just a prudent thing to do at this time.

Operator

Your next question comes from the line of John Newman with Oppenheimer.

John Newman – Oppenheimer

Can you talk a little about what type of data you expect to present at ECCMID? Will you be presenting a breakout of the efficacy in moderate to mild versus severe patients, and also do you plan on conducting a formal superiority analysis? I know the trial was not powered for that, but just wondered if you will be talking about that the meeting?

Michael Chang

We have not really finalized exactly what additional data we’ll present, but we are sure that we are going to present more data than we have disclosed. This has to be part of the overall strategy in terms of disclosure, timing, as well as publication, but we are also in the process of finishing up all the analysis on various fronts.

John Newman – Oppenheimer

Since you plan on potentially filing for fidaxomicin approval in Europe maybe at the end of this year or the beginning of 2010, is there a reason why you just wouldn’t go ahead and put the data for the second trial into the filing if it’s going to maybe add another month or two?

Michael N. Chang

I think the data if it is available at that time certainly is supplemental data, but we would be writing up a dossier based on the argument of a single trial. If we don’t do this and we are waiting for the second trial, then we’ll have to do the preparation purpose, writing a different dossier based on two trials, and that will push the EMEA filing towards the second half of next year.

John Newman – Oppenheimer

Any update on the potential issuance of the patents for fidaxomicin and Prulifloxacin?

Kevin Poulos

At this point on the IP front, there is no update on Pruli. We hope to hear back on the polymorph patent that we have filed for Pruli. Right now, we have five years under Hatch-Waxman. With fidaxomicin, as you know, in May ’08, we had the polymorph patent issued. We have had an allowance on the process patent around fidaxomicin. We would hope that would be issued here shortly, and we have on the composition of matter front, it was recently allowed in Taiwan, although that doesn’t directly impact the US PTO, just another data point around the IP, and again we hope to hear on that patent from the US PTO this year. As far as the timing of literally hearing about patents, it’s very difficult to predict, but with the issuance of the polymorph patent, we had asked the US PTO to pick up that composition of matter patent and just follow along since it was in the same genre.

Operator

Your next question comes from the line of Liisa Bayko with JMP Securities.

Liisa Bayko – JMP Securities

You did talk a lot about partnership. Is an outright acquisition something that’s off the table now or is that something you would consider?

John Prunty

One thing we have been consistent about is our intent to partner fidaxomicin ex North America. At the same time, we are flexible to different structures that make sense if somebody came in with a global deal that made sense. Sure, we would evaluate that. We do think that there is value to be created though in controlling the topline revenue on the product in the largest market in the world, and hence our strategy to keep it in North America, and at the same time as you mentioned if somebody came in with other structures that made in sense and it was value creating for shareholders, we would definitely consider those.

Liisa Bayko – JMP Securities

Are you going to be presenting any data on the different strengths for the fidaxomicin trial at the ECCMID conference?

Kevin Poulos

Yes. That analysis is nearly complete, and it will definitely be presented at ECCMID in Helsinki in May.

Liisa Bayko – JMP Securities

Any US trials you will be presenting at? EDW for example?

Sherwood Gorbach

We are submitting an abstract. Of course, the selection committee has to make its choice, but that abstract will go out this week, and we are also planning to present at the ICAAC meeting in this fall, and we will have new data to present at each of these meetings, so they will be somewhat distinct presentation as we expand our analyses.

Liisa Bayko – JMP Securities

To drill down into the Pruli data a little more, did you provide the time to last unformed stool number for the placebo arm in the Prulifloxacin, and if you haven’t, would provide it?

Sherwood Gorbach

Liisa, what we had announced and there is a poster is that the p-value around the TLUS on those studies was a p-value of 0.0001, and with the TLUS for Pruli of 24 hours and 32 hours in the second study. The TLUS for the placebo group could not be determined because more than half of those patients were not cured at their test of cure visit which was at day 5. Since they weren’t cured, they were assigned 120 hours, so that a p-value would be calculated there, so that’s why there is no TLUS for the placebo group.

Operator

Your next question comes from the line of Tom Russo with Baird.

Tom Russo – Robert W. Baird

To what extent have partners been kept in the loop or have been part of the strategy to file in Europe on the one study?

Kevin Poulos

In terms of their input on the filing strategy, it has been totally independent on Optimer. Optimer has been taking the lead on this. We have some very qualified regulatory advisors on our R&D team, so it is Optimer’s assumption that we will continue to take this forward on our own. Any additional help as time goes on, we will actually welcome that, but the way things are going, we are moving along quite nicely on our own path.

Tom Russo – Robert W. Baird

Kevin, I think you mentioned earlier metronidazole being maybe the most important competitor that you are targeting in terms of market share. Can you talk about, maybe just to check in on the IVSA treatment guidelines, where that stands and how you think they are shaping up with regard to use of metronidazole?

Kevin Poulos

I’ll refer that to Dr. Sherwood Gorbach who is very familiar with the progress of these guidelines.

Sherwood Gorbach

These guidelines have been in the committee for nearly two years, and we have no idea when they are coming out. I think there is considerable argument on the committee about best practice, so at the moment there are no official guidelines in this country.

Tom Russo – Robert W. Baird

Do you have any guess or read on whether metronidazole will be suggested for mild to moderate patients when the guidelines come together?

Sherwood Gorbach

Well some various other organizations have been meeting, and that seems to be the trend. At least for mild, possibly moderate, but for anyone who is hospitalized, the trend now is increasing use of vancomycin because of the problems of switching severity, patients can become ill very quickly and can have a fetal outcome, and there is no doubt that in the severe group, metronidazole does not perform as well as vancomycin.

Tom Russo – Robert W. Baird

Is the current plan still to run that head to head study after approval or might that move up to a faster timeline?

Michael N. Chang

We are currently still evaluating the option.

Tom Russo – Robert W. Baird

Are you able to give a percent enrolled for the second OPT-80 trial at this point?

Kevin Poulos

Yes, Tom. At this point, we are still just sticking to the timeline. We think we will complete enrollment and have data in that study second half of this year.

Operator

Your next question comes from the line of Adam Cutler with Canaccord Adams.

Adam Cutler – Canaccord Adams

I’m wondering given the positive results of the first Phase III study for fidaxomicin, have you seen an increase in the rate of enrollment in the second study?

Michael N. Chang

Yes. We have seen an increase in terms of rate of enrollment.

Adam Cutler – Canaccord Adams

But you are still projecting data around the end of this year?

Michael N. Chang

Yes.

Adam Cutler – Canaccord Adams

I imagine based on your comments earlier that one of the things you’ll be presenting ECCMID was the rate of NAP1 in the first Phase III, and I’m just wondering if you can give us a sense based on what you know so far about the second Phase III, how the NAP-1 rates compare?

Michaeal Chang

We have not given that information out. We did present in ICAAC meeting blended clinical samples from both of our trials. It was blended. We didn’t separate out the first trial or second trial. It’s in line with what’s out there.

Kevin Poulos

So that was 35% blended from both studies. The purpose of that was just to look at the prevalence of NAP-1 out there at this time. We know in our phase 2A reported last year, it was 42%. We know that in the Genzyme North American study it was 36%. So, around that range is the prevalence of NAP-1 out there.

Operator

Your next question comes from the line of Juan Sanchez with Ladenburg.

Juan Sanchez – Ladenburg

To what extent is either the timing or the quality of the potential ex-US deal being determined by development on the IP front?

Michael Chang

Is IP driving the deal? I don’t think so. The deal discussion has advanced very rapidly. It’s not going to be waiting for IP. No.

Kevin Poulos

No, it’s not dependent on the IP.

Operator

We’ll take a followup question from John Newman with Oppenheimer.

John Newman – Oppenheimer

My question was actually previously answered.

Operator

That does conclude our question and answer session. At this time, I’d like to turn the conference call back to Michael Chang to conclude.

Michael Chang

Thank you again for you time this afternoon and for you continued support. We look forward to updating you on our progress this year.

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