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XOMA Corp (NASDAQ:XOMA)

Phase 2 Clinical Results Conference Call

October 30, 2013 5:30 PM ET

Executives

Ashleigh Barreto – Head-Investor-Media Relations

John W. Varian – Director and Chief Executive Officer

Paul D. Rubin – Senior Vice President-R&D and Chief Medical Officer

Analysts

Simos Simeonidis – Cowen and Company, LLC

Jason D. Kantor – Credit Suisse Securities LLC

Ted A. Tenthoff – Piper Jaffray

Liana Moussatos – Wedbush Securities

Bert Hazlett – Roth Capital Partners

Adnan Butt – RBC Capital Markets

Graig Suvannavejh – MLV & Co

Matt Kaplan – Ladenburg Thalmann & Company

Operator

Good day ladies and gentleman and welcome to The XOMA Phase 2 Clinical Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions follow at that time. (Operator Instructions) As a reminder this conference call is being recorded.

I’d now like to introduce your host for today’s conference, Ms. Ashleigh Barreto, Investor Relations at XOMA. You may begin your conference.

Ashleigh Barreto

Thank you, operator. Good afternoon, everyone and thank you for joining us. I’ll be using a slide presentation today, I hope you have logged on to the call through Investor Section of our website. If not the slide presentation will be posted to the site later today. Joining us on the call, are John Varian, Chief Executive Officer; Paul Rubin, Senior Vice President-Research & Development and Chief Medical Officer; and Fred Kurland, Vice President-Finance and Chief Financial Officer.

Before we begin, I’d like to remind everyone this conference call will contain forward-looking statements about the Company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note, that these forward-looking statements reflect only our opinions as of this date and we will undertake no obligation to revive and publicly released results of any revisions, through these forward-looking statements in light of new information or future events.

Factors that could cause actual results or outcome to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings of Form 10-K and in other SEC filings.

I’d now like to turn the call over to John.

John W. Varian

Thanks, Ashleigh. Good afternoon, everyone, if you’re just dialing in and missed Ashleigh’s announcements please go to our website to view the slides, it’s actually quite important because we have some very detailed data slides so at xoma.com you can follow along with our speaking today.

On Slide 2, today we are able to talk to you about two separate studies from our Gevokizumab Proof-of-Concept program. Our Proof-of-Concept program was implemented in November 2011. It was designed to allow gevokizumab to point us to our next Phase 3 indication. We are very excited to announce today that our results have allowed us to select our next indication for pivotal development.

Gevokizumab modulates IL-1 beta, which has a role in a wide variety of inflammatory diseases, in order to identify the disease as they could most benefit from gevokizumab, we selected a diverse group of diseases for our Proof-of-Concept program. Moderate to severe inflammatory acne, erosive osteoarthritis of the hand, non-infectious scleritis, pyoderma gangrenosum and autoimmune inner ear disease.

In January of this year we announce encouraging results from our acne study. Today we announced the Day-84 data from our study and patients who have erosive osteoarthritis of the hand, EOA. And elevated C-reactive proteins or CRP, as well as the data from our Phase 2 pilot study in pyoderma gangrenosum patients. In addition, we are reporting data from two patients with generalized pustular psoriasis, who are treated under a compassionate use protocol.

I’m pleased to report that gevokizumab demonstrates clinical impact in each of these three indications. I will start with the EOA program. As a reminder EOA is a distinct subset of the patient population diagnosed with osteoarthritis of the hand. Based on our view of the published literature, we believed there are approximately 1.8 million to 2.2 million people in the United States with EOA. It’s much less common in osteoarthritis and clearly distinguishable from rheumatoid arthritis.

EOA patients experienced frequent episodes of inflammation and they have increased pain and diminished hand function than traditional hand osteoarthritis patients. EOA patients do not respond to commonly prescribed osteoarthritis therapies. Because of this physicians are required to escalate the treatment options.

Ultimately, many EOA patients are forced to resort to opioid therapy. EOA patients experienced damage in specific joints of the hand as the disease progresses. In C2 analysis of these affected tissues particularly the synovium, cartilage and bone show the presence of IL-1 beta. Paul will be talking with you about the results from the first three months of our six month EOA study.

By perceptively, incorporating two time points of which together our primary efficacy data we have given ourselves the opportunity to learn about gevokizumab’s impact on the signs and symptoms of a debilitating disease.

With that I will turn the call over to Paul to walk you through the EOA program designs and Day-84 data.

Paul D. Rubin

Thanks John and welcome everybody. So we if turn to Slide 4, see the study 160, which is our erosive osteoarthritis of the hand study in patients with elevated CRP, enrolled 85 patients, 57 received gevokizumab 60 milligrams and 28 received placebo. They were dosed subcutaneously every 28 days. The data we’re presenting today is through Day-84 or three months, but by design the blinded study continues for six months. Patients were not permitted to take any medications beyond acetaminophen as needed basis to treat pain.

Now confirming that existing therapies are inadequate, we founded 80% of the patients entered into our study and there are no background medication, despite significant pain at baseline as indicated by Visual Analog Scale. We captured the amount and frequency with which they use the acetaminophen throughout the study.

Patients were selected after meeting the rigorous screening criteria we established to ensure we have the targeted and viable patient population. The study was designed to compare the change of total AUSCAN score from baseline between the gevokizumab treated patients and the placebo group at scheduled intervals including days-84 and days-168.

AUSCAN is the acronym for the Australian/Canadian Hand Osteoarthritis Index, which is the self-administered questionnaire that assesses the three dimensions of pain, disability and joint stiffness and hand osteoarthritis using 15 questions. AUSCAN specifically measures pain levels while resting, gripping, lifting, turning and squeezing. The index is scaled on a 5-point Likert 100 millimeter visual analog, and a 11 box numerical rating scales. And it has been validated as a reliable and responsive measure of hands osteoarthritis.

Study 160, assess the changes in AUSCAN at two weeks and at monthly intervals from baseline. AUSCAN allows us to quantify the change from baseline in each patient’s pain scores, stiffness score, physical function score and the change in total score. Now the relative contribution is strongly weighted toward pain and function with stiffness being a minor component. We also evaluated the proportion of patients who showed improvements of greater than or equal to 20%, 50% and 70% in each of the AUSCAN components as well the total AUSCAN score.

In order to determine gevokizumab’s potential to impact the physical damage of EOA, we are collecting X-rays and MRIs and on days 0, 84 and 168. These will be reviewed and analyzed by an external central reader. The day-84 from these objective findings is not yet available.

Now in osteoarthritis the approval endpoint is pain. And for erosive osteoarthritis patients function is consider to be equally important. And disease modification is important but not required for initial approval. Study 160 was designed with 80% powered and one-sided significance of 0.05, assuming a dropout rate of 10% and was powdered 15 percentage point difference between the active and placebo arms. This primary analysis used Last Observation Carried Forward.

We now take a look at the top line data through day-84 from our study. We’re now on Slide 8. Gevokizumab demonstrated a clinical benefit in the change from the baseline and pain component of the AUSCAN Index achieving a 24% reduction on day 84. As it’s typical in arthritis studies the placebo group also demonstrated a reduction in pain. But interestingly, the placebo response rate in this study of EOA, is much less than seen in typical arthritis studies. This may indicate how difficult this disease is to impact. Even so when you compare the day 56 results to the day 84 results you see the devokizumab treated patients continue to have improvements in their pain scores. Where the pain scores from the placebo treated group have leveled of. And looking at the slopes of the pain scores, it appears that the difference from placebo maybe increasing with time.

Turning to the AUSCAN function score, the gevokizumab treated groups showed a 21% improvement in function compared to a 12% improvement in the placebo treated group at day 84. We see the same continued divergence between active and placebo as was seen with the pain, but a larger difference in somewhat less variability as indicated by the calculated standard error.

Our experts have stated that it’s not unusual to see the functions scores outpace the pain measurements as many of these patients have comorbidities that can contribute to pain perception. Again, if these trends continue the magnitude of change from placebo as well as the statistical power the difference could significantly increase with time.

The total composite score it’s very similar to the previous two charts with gevokizumab achieving 23% reduction in total AUSCAN score day 84. In previous studies of traditional hand OA are predictive and the experience shared with us by our advisors is correct. The separation between the placebo treated arm and the gevokizumab treated arm should become more pronounced when observing between day 84 and day 168. Members of our team are currently attending the American College of Rheumatology meeting in San Diego and have shared these results with KOLs in attendance.

Their impressions have been consistent that these three month data are encouraging, and based upon their experience with patient treatment and other studies they have participated in the beneficial effect compared to placebo should increase with time.

Now the data charts, I presented are based on mean changes. We did see a higher level of variability in our EOA results than we expected. The high variability disproportionately affects the mean calculations as in the small study only a few patients can have a significant impact on mean scores.

Looking at the data comparing medians may correct for some of this disproportionate contribution of outliers. And in fact when we did do that our data does look stronger when using this statistical technique. We presented the mean data since this was prescribed in our protocol. Now another way to limit distortion that comes from variability is to look at responder analysis.

If you go to Slide 11, we showed the responder analysis for the pain component of the AUSCAN score. We look at responders in the 20%, 50% and 70% threshold on the AUSCAN scales as these levels are commonly evaluated in other studies of arthritis. But our study 50% of the gevokizumab treated patients experienced 20% improvement in their pain, while 33% placebo reported the same. Interestingly the proportion of patients reporting a 50% reduction was almost equal between the two groups.

What is most promising is our all patients was achieving a greater than 70% improvement in plain scores were treated with gevokizumab. This was approximately 10% of the group. As you can see six out of 57 patients on gevokizumab versus zero of 28 patients on placebo achieved this particular milestone, which is 70% improvement.

On the physical function scale again this charts looks similar to the pain function, except the gevokizumab-treated patients did better at each measurement level. It is not surprising we see a more consistent effect in improvement in physical function as pain is a far more subjective measure. According to our KOLs improvement in function is their primary focus in this disease. There’s also a theoretical issue that increased function can lead to more pain since the patient who can do more – may do more and then reignite this pain.

Then looking at the responder analysis for total. Again as you expect we had a meaningful response rate in the gevokizumab-treated group in total AUSCAN score. When you look at the responders with a 70% improvement they were all treated with gevokizumab and in fact we did see a P-value of borderline significant at 0.8 again showing zero of 28 versus 6 of the 57 actively treated patients.

Ultimately clearly understanding as much as possible about this patient population should help us best design our Phase 3 clinical trials. We will carefully assess the full day 168 dataset as well as X-ray and MRI images when they are available. These data together with the data from our supplemental study in EOA patients that do not have an elevated CRP, should help us determine what gevokizumab should have the most impact. So we’ve generated some encouraging data through the day 84 endpoint.

First, we’ve seen gevokizumab-treated patients consistently have a greater magnitude of improvement in the individual and composite AUSCAN measurements at day 84 and the magnitude of this effect seems to be improving with time.

Secondly, only patients treated with gevokizumab achieved a 70% of greater response. Finally, we have learned there is far more variability in response to this patient population than in our initial assumptions. And in fact, based upon the actual data derived from the study, we have calculated approximately 230 patients per group would be necessary to achieve statistical significance from mean changes in total AUSCANs that are similar to our day 84 results. This is a number consistent with what has been seen in pivotal trials for other arthritis trials evaluating additional medications.

Importantly, if the data continues to improve with time, which we believe is possible, recorded patient numbers would even become less. Contingent improvement versus placebo from three to six months is typical in studies of hand arthritis as placebo tends to return to baseline and variability in placebo response diminishes. Also, as this is a chronic disease, it is common for maximal benefit not to occur until greater than the three months time point in terms of treatment.

Therefore we find this initial result to be heartening, especially if data continue to follow this pattern after six months of therapy. As there haven’t been any compounds approved for the treatment of erosive osteoarthritis of the hand, we believe FDA will require any compound to follow the traditional hand OA clinical designs and the benchmark to determine success will require demonstration of benefit after six months of therapy.

Our data through Day 168 will be available in the first quarter of 2014. As we have radiographic images that will need to be reviewed analyzed. You should not expect us to report the data 90 days from now.

The analysis of these images from MRI and radiographs could enhance our results and help us identify the patients most likely to benefit from gevokizumab. Equally as important, gevokizumab continues to have a very safe profile. In our EOA study it was very well tolerated and there were no drug-related serious adverse events. Also, adverse events were comparable between the gevokizumab and placebo-treaded groups.

I’ll now turn the call back to John.

John W. Varian

Thanks a lot, Paul. I want to reiterate what Paul just said as it is important. Six months is a standard time period to establish primary efficacy in pivotal trials for hand OA. Our Day 84 results are showing the placebo effect begin to slow at Day 56 and the biggest separation between the placebo patients and the gevokizumab patients really began to show itself at Day 84. We appear to be moving in the right direction to achieve an even more impressive result to Day 168, the likely primary time point required in a Phase 3 trial.

So let’s quickly touch on what this all means for next steps. We now have completed enrollment in our supplemental EOA study, 162, which includes patients who met all the entry criteria of study 160 except that the patients did not have elevated CRP.

This supplemental study is capturing the change in AUSCAN scores at Day 84. The data from this study will be available in the first quarter of 2014. When we have these data, the additional patients provide the opportunity for meta-analysis and the potential to improve the statistical powering of our Day 84 data. We’re very encouraged by the data we’ve generate to date. We anxiously await the full six months dataset from study 160, which remains blinded to us.

With those data in hand, we will make a decision on progressing to a Phase 3 EOA plan on which we would seek feedback from FDA. While we wait the remaining EOA data, we are moving forward into a pivotal Phase 3 study in pyoderma gangrenosum and generalized pustular psoriasis. These two conditions are rare diseases classified as neutrophilic dermatoses.

As you recall, in spring of this year we evaluated the neutrophilic dermatoses indication and spoke with KOLs in this space. Ultimately, we determined our first study should be conducted in pyoderma gangrenosum or PG. Our goal was to establish proof-of-concept in this specific patient population.

In May, we obtained input from the FDA about our plans, which led us to launch our clinical effort in PG. The pilot study was designed with two cohorts; first, with four patients receiving gevokizumab 60 milligrams once monthly. The design provided that we assess the Day 28 data in the first four patients and then decide if we wanted to dose the next four patients at 120 milligrams once monthly.

In addition, this summer we launched exploratory work in other neutrophilic dermatoses indications under compassionate use protocols. In late October, the four pyoderma gangrenosum patients had completed their Day 28 visits and the data are exceptionally compelling.

Neutrophilic dermatoses are an umbrella of rare skin disorders with neutrophilic involvement. Neutrophilic dermatoses are classified based upon their individual, clinical and pathological features as well as the identification of underlying diseases that are associated with neutrophilic dermatoses. The causes of neutrophilic dermatoses are unknown, but patients may be experiencing an immunologic reaction.

Neutrophilic dermatoses can present as blisters, plaque, nodules or ulcers and the lesions maybe localized or cover a large area of the body. Most neutrophilic dermatoses are treated with systemic corticosteroids and other immunomodulators. However, treatment is not uniformly successful and there is significant variability in the diseases that are classified as neutrophilic dermatoses.

Two of the more commonly diagnosed neutrophilic dermatoses are pyoderma gangrenosum and generalized pustular psoriasis. Pyoderma gangrenosum is a severe idiopathic inflammatory ulcerative skin disease with undetermined cause in most patients. Patients most often experience lesions on their lower extremities. Based upon published reports, approximately 50% to 70% of the pyoderma gangrenosum patient population has an underlying systemic condition, the most prevalent of which is inflammatory bowel disease.

The remainder of the cases are idiopathic or from an unknown cause. Physicians treat pyoderma gangrenosum today with oral corticosteroid therapy and often combine that with systemic immunosuppressant therapy. Generally PG patients require extended therapy to experience remission. Both the U.S. National Organization for Rare Diseases, or NORD, and the European Organization list pyoderma gangrenosum in the rare disease databases.

Orphanet provides an incident range between 1 and 3.3 per 330,000. The NIH’s Office of Rare Disease Research lists pyoderma gangrenosum as occurring in about one per 100,000 people. The estimated prevalence of PG is between 3,000 and 5,000 persons in the U.S.

The patient population XOMA studied in its pilot trial have the ulcerative variant of pyoderma gangrenosum, which is the most common form. These patients have rapidly enlarging ulcers and an undetermined border. The ulcers release pus and have a red halo surrounding the ulcer. The ulcers are painful and they are prone to infection if not treated properly. In most cases patients will have a scar after the ulcer heals.

Patients receive a combination of topical and systemic therapy including high doses of corticosteroids and immunosuppressants to treat the ulcers. These may take up to two years to heal. A patient’s prognosis is directly linked to his or her response to therapy for the underlying disease. If the underlying disease responds to the therapeutic regimen, the pyoderma gangrenosum should resolve. However, an estimated 46% of patients experience a relapse even when continuing on systemic therapies.

Now let me turn the call back to Paul to discuss our program in pyoderma gangrenosum. Paul?

Paul D. Rubin

Thanks, John and we’re now on Slide 19. Our pilot study in pyoderma gangrenosum was designed to enroll four to eight patients with acute inflammatory PG to determine the improvement in Investigator’s Assessment of the target PG ulcer. The first cohort of four patients, which received 60 milligrams of gevokizumab dose once monthly for three months. After the four patients have received their first dose and were assessed at their Day 28 visit, we reviewed the data to determine if we are going to increase the dose to 120 milligrams for three months in the second cohort of four patients.

All four patients of the 60 milligram dose have completed their Day 21 visit. One has completed the full three-month study period. Three of the four patients showed improvement in ulcer size by Day 28. The first patient had total resolution of the ulcer at Day 84 and the second showed a 93% improvement in his ulcer size at Day 56. Based upon the results of these four patients we decided not to increase the dose. Importantly, all patients reported reduction in their pain level.

We are submitting these data for peer review and expect we’ll be able to give full details in 2014. Now just as a warning, I’m going to be showing photos from several of our study participants. If you have any experience with diabetic foot ulcers, the images are not too dissimilar, and as John says, picture speaks a thousand words. And again, I’ll remind you that these photos are available if you’re on slide show on our website.

Slide 21 reveals the first patient that received our drug. It shows their baseline disease and then what the same area of the skin look like on Day 84 after receiving three doses once per month 60 milligram gevokizumab subcutaneous. As you could see by the picture as well as in the ulcer size data below, the ulcer completely healed. In addition, there was no sign of active pyoderma gangrenosum.

If you go to the second patient, this is the second patient in the study that made it through Day 56. This patient at Day 56, again you could see that there was more than 90%, 93% healing by Day 56, and again only minimal signs of information. And in this case their pain completely dissipated by the Day 56 time point. A third patient actually did show a response at Day 28 of about 14% and then finally our fourth patient, at least by the time of review did not show response.

The next slide shows the individual pain scores from baseline or Day 0 to the length of time that they continue the study drug and as you could see four patients improved their pain scores or their pain indexes.

When we spoke with the FDA earlier this year, we were directed to secure clinical data in the patient population, present our findings to them along with our pivotal program, and they would make a determination. With this compelling data we are planning to approach the FDA about the requirements to move into a pivotal program in PG. We are working with our KOLs to design the pivotal program. Ultimately we will discuss PG being part of the broader neutrophilic dermatoses indication in order to understand what would be required to seek a label in this indication.

While we’ve been conducting the PG study we have received interests from physicians to use gevokizumab on Compassionate Use protocols to treat their patients with other diseases under the neutrophilic dermatoses umbrella. These may include Sweet’s syndrome, Schnitzler syndrome, hidradenitis suppurativa, and generalized pustular psoriasis. We are working with Dr. Alan Menter, Chief, Division of Dermatology and Director of Dermatology Residency Program at Baylor University Medical Center, Clinical Professor of Dermatology at the University of Texas Southwestern. Dr. Menter requested a Compassionate Protocol in order to provide gevokizumab to two of his patients with generalized pustular psoriasis.

GPP is a rare acute, chronic, or relapsing neutrophilic dermatosis. Patients who have a chronic and relapsing form of GPP typically experience episodes of fever and tremors accompanying by the immediate appearance on the skin of non-infectious pustules that merge to become larger clusters of pus. These clusters dry up and peel off in sheets exposing raw new skin. These episodes may take weeks to resolve, and after an episode, the patient may be left with significant scaling of the affected areas. Patients who experience GPP may have localized disease, or the disease may affect the majority of their bodies, which puts them at even greater risk of infection. One form, named von Zumbusch pustular psoriasis, may be life-threatening. GPP accounts for approximately 1.7% of the 1,500 new cases of psoriasis diagnosed annually in the United States.

The first of Dr. Menter’s patients has the von Zumbusch experience of GPP. At Day 56 this patient showed significant clearing of his GPP pustules. The second patient who has palmar-plantar variant began to show clearing of the pustules at Day 56. Both continue to receive gevokizumab at Dr. Menter’s discretion. Again, I’m going to show you patient photos.

As you can see on Slide 27, this patient had the generalized pustular psoriasis or von Zumbusch variety and you could see the dramatic difference in the way his skin appeared between the time of presentation at week zero and after a one dose or after four weeks of gevokizumab therapy. Interestingly, at the initiation of the therapy the patient was wheelchair ridden, and by Day 28 he was able to move about quite a bit more.

The second patient shows more of an indolent form involving both the palmar and plantar areas as well as the lower extremities. In this patient by week eight, you saw about a 40% improvement in their psoriatic index, also what’s considered a clinically relevant change by this point in time.

As you could see, we’re receiving very compelling evidence of gevokizumab’s potential to treat these patient populations. The team is working diligently to develop a pivotal program plan and prepare for follow-up FDA meeting. At a meeting we will review the data we have in hand and discuss the requirements to move into a Phase 3 in either or both indications.

We have several options available to us, which we will discuss with FDA. Each has its own advantage and disadvantages. Ultimately, we will consider pursuing a boarder a neutrophilic dermatosis indication using either a single or multiple etiologies for the pivotal trials or trials.

I will turn the call back to John for final remarks.

John W. Varian

Thanks again, Paul. We’ve gone through a great deal today. The data our investigators have generated in pyoderma gangrenosum and pustular psoriasis is compelling. We are now pursing a pivotal gevokizumab study in neutrophilic dermatosis.

We started this call talking about our Day 84 EOA data and we are very encouraged by what we have seen today in this indication. When we analyze the full six-month dataset we will be able to make decisions about a Phase 3 EOA program. If all goes as we hope we are very excited to more forward in all these indications as we believe gevokizumab could have a tremendous impact on these patient population.

With that, we’ll open the call to questions on the EOA study and our plans to pursue pyoderma gangrenosum and pustular psoriasis potentially in Phase 3 trials. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Simos Simeonidis with Cowen & Company. Your line is now open.

Simos Simeonidis – Cowen and Company, LLC

Hi, guys. Thank you for taking the questions. Congratulations on the data. When we usually see a company announce data on one indication and then announce a pivotal trial on another indication, we’re skeptical. But then after seeing the graph from EOA, I think this is really good data. So let me just first ask a couple of questions on EOA. There’s a strange response or a rebound of the placebo arm, and obviously the gevo arm is doing really well and is continuing to improve pain score. I printed one of the slides and it looks like as you go past three months pain is going to continue to go down where the placebo arm is flattening. Maybe Paul can talk about do you – what do you attribute this rebound after two weeks into the one-month time point from the placebo arm?

Paul D. Rubin

Well, I think it’s pointing out how variable the placebo response is in pain. And if you look at the existing trials and majority of these are in hand osteoarthritis, not necessarily erosive, it’s really common to see kind of placebo bounce around for the first three months. It’s difficult to really show a distinction between active and placebo at Day 84. But as you proceed beyond Day 84, it’s very typical on other studies to see the variability in the placebo response decrease. So they start realizing, hey, this drug isn’t working. And then with time their placebo response flattens out or actually worsens. While if the treated arm is actually getting a benefit that will continue to diverge. So the results we see here is not uncommon in the reported literature of other trials for hand osteoarthritis, especially the pain component, which as I mentioned, is the most variable and is the most confounding things that could affect the self-reported endpoints.

Simos Simeonidis – Cowen and Company, LLC

All right. In the pain and some of the other components, one of the most convincing things, for me at least, was that in the 70% responses, it was very consistent and looked like it was the same slide you were showing. All the responses were from gevokizumab. There was almost nothing from placebo. But I was surprised to see that in the 50% response there were pretty similar placebo and gevokizumab. And then on the 20% you had gevokizumab being more dominant. What do you think of that, Paul?

Paul D. Rubin

Yes, again related to kind of 25% to 50%…

Simos Simeonidis – Cowen and Company, LLC

50% that Paul.

Paul D. Rubin

Yes, again related to kind of the 25% to 50% response three months, you are still subject to the vagaries of placebo response, so what I would expect to see if this continuous on the present trends, is that this will be more consistent in all the variables. As you recall the function variable which we now have less of a variable response of it, that actually was consistent across all response levels, 20, 50 and 70. And according to our experts, that’s exactly what they would expect to see that the function tends to go ahead of the pain response. So again this is not atypical for the three month time period.

Simos Simeonidis – Cowen and Company, LLC

Okay. And then, I mean again, I thought these data are very impressive, especially that you see consistent in the big response category, in the 70% in every part of AUSCAN that you showed, it was all gevokizumab. So given these preliminary data at least and given that you don't have a difference in EAs again, this looks like a drug and it's clean. You leave the possibility open of doing or pursuing a Phase 3 in this indication. Is that accurate?

Paul D. Rubin

Yes, as we said in the conference in order to effectively design the Phase 3 the primary endpoint would likely be the six month point in time. So as you could see if the trends continue as we are presenting them the divergence from placebo might be greater in this statistical power greater, so until we have that final piece of information it will be really difficult to design the Phase 3 program. Coupled with what we are hopeful for is that the MRI especially the MRI data and possibly the radiograph data will help us pretreatment identify those patients most likely to respond to the drug. So for example, the edema you could see in the joints of affected patients there is other study suggesting that you could actually see a decrease in this edema within actually a few week period.

So if we can identify the patients who have the most edema pretreatment and those are the ones that decrease we actually can even amplify their signal in Phase 3. So I think we really need this full dataset to really come up with what the best possible design and the most likely success would be in our pivotal program.

John W. Varian

Just to add to that, Simos, the EOA studies themselves the Phase 3 studies themselves would be big studies and there will be long studies, but it’s a huge commercial opportunity for us. We want to have as much data as possible before we make the decision to go into Phase 3 and then once we come up with what our plans would be we want to get input from FDA on that, because it is in fact a very important decision for this company.

The good news about where we are is that it’s not that we just delivered data, now we’ve got to start new studies. All the things that we want to learn we think we can learn from the ongoing study that we just been reporting out day-84 data, and also the supplemental study that we’re doing in the patients throughout the C-reactive protein.

So because additional endpoints are going to be measured beyond even pain and function that sort of thing. We really want to have all the data available to us before we make the decision around going forward in EOA. Just as a contrast in pyoderma gangrenosum because it’s such a small patient population because we’d already had conversations with the FDA that it’s very possible that we could have an abbreviated development plan for an indication like that. It’s easy with the data that we’ve generated for us to make the decision. We should be doing this now and we’ve made the commitment to launch the pivotal program there.

Now because of the data we’ve generated and we think of a shorter path to approval.

Simos Simeonidis – Cowen and Company, LLC

Okay, great. So a couple quick questions on that program and I'll jump back into queue. I know there's a lot of people interested in asking questions. So on the PG program, or rather on the pustular psoriasis, you mentioned an increase of 2,500 in the U.S. and the Von Zumbusch subset is life threatening. First of all, how big is that subset and would you have to – is rather – is the psoriasis indication also have an IL-1 beta component to it – involvement into it?

Paul D. Rubin

It’s a question of belief that this is neutrophilic – an intense neutrophilic inflammatory response undoubtedly would have an IL-1 beta component associated with it. The separation between the Von Zumbusch and the more indolent form along both cases pustules are present and theoretically the drug would be useful, in fact we have some early data suggest at least in these two patients one with one formula and one with the other they both responded, it’s still possible. There really isn’t good data to say what the ratio of each one is at this point in time.

Simos Simeonidis – Cowen and Company, LLC

Thanks.

Paul D. Rubin

But we know what the total amount is and interestingly these doctors that we work with have been able to find these patients in a relatively short period of time consider the rarity of the disease. So that’s encouraging from a development perspective.

Simos Simeonidis – Cowen and Company, LLC

And the size, I know you spoke about the different potential strategies doing APG trial only or doing or going after a broad neutrophilic dermatosis indication. What is the – in the latter case what is the roughly the size of the market in the U.S. number of patients in the U.S.

Paul D. Rubin

We don’t have official but the probably two of the more common ones, either ones we would listed here. So if you look at our numbers it is approximately 7,500 patients perhaps it’s double that if you include everything.

Simos Simeonidis – Cowen and Company, LLC

And finally, rough estimate of when you might start the trial?

Paul D. Rubin

It really is a function of how quickly we can get a meeting with FDA and get this end of Phase 2 package into them, and that we just started working on it, so…

Simos Simeonidis – Cowen and Company, LLC

But do you think it would be in 2014?

John W. Varian

We would say yes, in 2014 we would have the feedback such that we can start the study hopefully.

Simos Simeonidis – Cowen and Company, LLC

Great. Thank you for taking the questions and congratulations on both studies.

John W. Varian

You’re welcome. Thank you, so much.

Operator

Thank you. Our next question comes from the line of Jason Kantor with Credit Suisse. You may proceed with your question.

Jason D. Kantor – Credit Suisse Securities LLC

Thanks for all the data, very helpful. I have a bunch of questions as well. Why not proceed to the higher dose just to see if that has any added benefit? Also, do you think that you have the right dose for the osteoarthritis of the hand? Clearly you had some patients with very impressive 75% responses, but perhaps you can move more patients into that bucket with a higher dose?

Paul D. Rubin

Answer to your first question, when you look – again this is – we’ve spoken with probably the world experts on these neutrophilic dermatosis. And the responses we are seeing from the time and the magnitude is the maximum they’ve ever seen with any drugs and the drugs they have considered that do work such as high dose corticosteroid and high dose cyclosporine. So at least from our experts, it’s unlikely to see a better response by increasing dose plus, in general that the rapidity of the response is not necessarily commonly seen. So we are already seeing at least in this very small sample a response that’s more or as good as anything that’s out there right now.

So from that perspective going up to higher dose might actually impart more risks than benefit. This is sort of the way they are looking at. Having said that we will if – in the larger cohort of patients we start seeing a less consistent response we can certainly consider going up in the dose.

For the EOA, I don’t think we can even answer that question from this three month time period. As you mentioned, I don’t think you’re seeing the maximum effect in three months if you believe almost every study that’s ever been done for a six month period in osteoarthritis of the hand.

So we really will see this maximum effect after the six month period and that will be the time that we could determine whether or not it’s reasonable to go to a higher dose.

From a PK/PD perspective we do have some data from other trials suggest that the 60 mg dose gives us plasma concentrations that are consistently above what we believe a therapeutic level is and we know that with the concentrations we get at this at least in theory every molecule of IL-1 beta should be bound.

Jason D. Kantor – Credit Suisse Securities LLC

Okay. And in terms of the PG study, I guess a couple of additional questions. Were these patients all ulcerative colitis patients or idiopathic patients, and did that matter in terms of who responded? Were these patients that were refractory to other therapies that they might have gotten otherwise? And then you talked about a target lesion, but I'm wondering if these patients perhaps present with multiple lesions and…

John W. Varian

Yes.

Jason D. Kantor – Credit Suisse Securities LLC

…and can you say that those patients who responded across lesions?

John W. Varian

Those are good questions. I think three out of the four patients were idiopathic and I think one had underlying rheumatoid arthritis, if I'm not mistaken, but we will get that exact data. Interestingly that first patient that showed complete healing a day before had five ulcers and all five completely healed.

Jason D. Kantor – Credit Suisse Securities LLC

That's very interesting. And then I guess lastly there was a mention in the press release of a patient with what you called it exfoliative dermatitis.

John W. Varian

Yes.

Jason D. Kantor – Credit Suisse Securities LLC

I am just wondering, you say that that was unrelated, can you explain that? Would that have been classified as Stevens-Johnson syndrome?

John W. Varian

The physicians said it was unrelated, and this happened in time. This patient had a secondary infection which is also very common in these diseases. They were treated with vancomycin and dicloxacillin and then the dermatitis occurred in time, right after their vancomycin therapy. So we can’t say it’s undoubtedly not a drug effect. But certainly from a mechanistic perspective it’s hard to postulate and vancomycin is known to cause this.

Jason D. Kantor – Credit Suisse Securities LLC

Okay. Thanks. I'll jump back into queue.

John W. Varian

Okay, thanks Jason.

Operator

Thank you. Our next question comes from Ted Tenthoff with Piper Jaffray. You may proceed with your question.

Ted A. Tenthoff – Piper Jaffray

Great. Thank you very much for the update, and taking my question. Can you hear me okay.

John W. Varian

Yes, we do. Thank Ted.

Paul D. Rubin

Hey, Ted. How are you?

Ted A. Tenthoff – Piper Jaffray

I am doing very well. How are you guys? So I'm not sure if my questions have been asked or not through this slew of questions that have already been asked. But I guess starting kind of in a fresh area with respect to this data is there any read through with respect to the CRP impact and kind of how information might have impacted these outcomes and therefore any read through to the normal CRP study?

Paul D. Rubin

Yes. We are still evaluating that data, but if you remember in this study all patients have Ted, an elevated CRP. So we don’t know if it’s a linear correlation with level or is it a threshold phenomenon. So we really can’t really answer that question, and see until we see what happens with the low CRP patients, determine if there is a correlation or not. But I think ultimately we will try to do additional analysis. And to realize we have done the data we saw for the first time like two day ago.

Ted A. Tenthoff – Piper Jaffray

Yes.

John W. Varian

We switched off the process of kind of churning through it.

Ted A. Tenthoff – Piper Jaffray

Understood.

Paul D. Rubin

But I think that’s an important question. Not only CRP levels, and whether or not they can predict response, but also the MRI’s they think will be equally as important because that’s an objective measure or sound relations.

Ted A. Tenthoff – Piper Jaffray

Did you actually measure or can you measure IL-B change. I'm sorry if I missed that in IL-1B.

Paul D. Rubin

Yes, unfortunately it is – as cytokines go circulating level even in heart diseases are not uniformly elevated. So you can't measure circulating IL-1 beta data to try to look it as a surrogate of either activity of decease or response. I think IL-1 beta acts more at the level of the tissue than in the circulation.

Ted A. Tenthoff – Piper Jaffray

Okay, awesome. Thanks, guys. Looking forward to the PG details.

Paul D. Rubin

Okay, sure.

Operator

Our next question comes from the line of Liana Moussatos with Wedbush. You may proceed with your question.

Liana Moussatos – Wedbush Securities

Thank you. So are inflammatory acne and anterior scleritis out of the picture now?

Paul D. Rubin

The answer is no. When it comes to scleritis, it was one of our proof-of-concept studies that we actually launched about a year ago right now. But what we’ve decided with that intentionally is we’re keeping it moving along in a open label kind of POC level as we complete our non-infectious uveitis studies and depending on the results from those non-infectious uveitis study as you can imagine, the physicians that treat one would also be treating the other.

We are keeping it moving along at a steady pace, so that if we get good results with the non-infectious uveitis indication we can then hit the accelerator on scleritis. So we’re just kind of going to keep that moving along until we know more about the NIU indication.

When it comes to acne we continue to do our market research and what we know so far is that there is a role for a drug like Gevokizumab in patients who fail systemic or antibiotics and who don’t want to go to Accutane.

So there is a role for a drug like ours, what we need to understand better than we do today is how it fits with all the other indications that gevokizumab might go into from a market and pricing standpoint. So that work is ongoing and we will make a decision around that in the future. Right now, what we know is pyoderma the way to go and EOA is something that we need to continue to look at the data that’s being generated and make a decision around that.

Liana Moussatos – Wedbush Securities

Okay. And what would be the ballpark cost of a Phase 3 for PG?

Paul D. Rubin

It really depends ultimately on what FDA tells us. And there is probably a wide variation as to what are the instructions we got. Anywhere from single 30 patient study to two or three studies with 70 patients. But either way it will certainly be significantly smaller than erosive osteoarthritis program.

Liana Moussatos – Wedbush Securities

If you were successful on PG, would you commercialize it on your own?

Paul D. Rubin

Every indication that we talked about are indications we well commercialize gevokizumab ourselves in the U.S. Okay, so every indication that we’re chasing right now are the ones we’re talking about if we’re successful and have the opportunity to commercialize the drug. We will do it ourselves in the U.S. And just to remind everyone, we have full U.S. rights for Gevokizumab in all the indication we’re talking about there is only one exception that’s cardiovascular and we even have the ability to buy that back. And we also have rights in Japan and that’s some place well of course we would not commercialize ourselves.

Liana Moussatos – Wedbush Securities

Thank you.

Operator

Thank you. Our next question comes from the line of Bert Hazlett with Roth Capital. You may proceed with your question.

Bert Hazlett – Roth Capital Partners

Thanks. A couple on the erosive osteoarthritis of the hand, I guess if the results don't move one way or other over the next 3 months and they stay as it is, would you consider a Phase 3 program for that indication?

John W. Varian

That’s one of the reasons we try to do real prediction of group size on the basis of the variability we’re seeing. So we’re encouraged to see that even if we got the same results, as we see at this three month data. It’s still will require a study with only 240 patients. Now if you look at the placebo adjusted benefit, it’s very comparable to drugs that have been approved for hand osteoarthritis and this is erosive, but certainly you can look at drugs that have hand osteoarthritis in their label, the benefit versus placebo is very comparable to what we saw at three months.

So we think, again we haven’t had a lot of time to go through this, but certainly there is considerably a path forward if all we get is the magnitude of the difference that we see in this after the three months time period.

Paul D. Rubin

Yes. And then just to say very specifically at 230 patient per arm study is not frightening at all. So I mean that’s – so we’re going to learn more, we’ll make our decision in the future but the reason you do these Phase 2 is to be able to predict the size of the Phase 3 and this was very encouraging to us.

Bert Hazlett – Roth Capital Partners

Okay. Thank you for that answer. There's a lot of data to digest here but I guess in terms of the neutrophilic dermatoses, what endpoints do you think might be measured as you have had your interactions, however brief or extensive, to-date with FDA? And how long do you think the studies actually might take? I don't know whether you just discussed that but I'd ask that specifically.

John W. Varian

There are guidance for trials relating to ulcers that FDA has put out but these are pretty much things like diabetic ulcer and venous stasis ulcer. So they were looking at ulcer healing as the endpoint. And when we initially approach FDA we thought well that might be too aggressive of a hurdle for something like pyoderma gangrenosum, until we saw the data. And in fact at least in the first two patients that have gone to 56 and 84 days we actually are seeing pretty close to complete healing.

So that in some ways doesn’t scare us. However when we talk to our experts, the degree of healing or at least a quiescence in the inflammatory nature of the lesion is clinically relevant. So we would probably try to negotiate some type of end point around there and likely these studies rather than one year probably will be a duration under six month range. At least that’s what we’re thinking about right now.

Bert Hazlett – Roth Capital Partners

Okay. Thank you. And I guess just one other question on that and then I want to come back to, well, I believe you mentioned, Paul, that tolerability of the antibody in PG was quite good. Could you elaborate on that, the safety and tolerability there?

Paul D. Rubin

Yes, tolerability was good, what we saw as I say, I think we mention the side effects is that, unfortunately in these patients there is a lot of secondary infections that occur and that’s common to the disease. So in the patient that we saw for example of pustular psoriasis, that patient did have a secondary infection as a result and a systemic antibiotic therapy, and then had a reaction status post the antibiotic therapy. So I mean, theoretically it was time related to getting vancomycin which was know to cause the effect, but still they were on the drug simultaneously. So we have to keep an eye on them.

Bert Hazlett – Roth Capital Partners

I’m sorry to skip back to UAH, but in terms of the second study, I believe that's a 3-month's look at the endpoint. Is there any ability to take a longer look at that data based on what you're just seeing with this first one?

Paul D. Rubin

Yes, in fact almost all of these patients are going into a roll over studies, status post to three months and we have added an AUSCAN evaluation three months into the roll over. So in fact we will have 6 month data from that patient group as well.

Bert Hazlett – Roth Capital Partners

Terrific, thanks. Thank you folks, I appreciate the answers.

Paul D. Rubin

Yes, thanks Robert.

Operator

Our next question comes from the lines of Adnan Butt with RBC Capital Markets. You may proceed with your question.

Adnan Butt – RBC Capital Markets

Hey, everyone, and congrats on having a positive pain study. A couple of questions. I think good ones have been asked so bear with my questions here. Can you put the benefit into perspective in terms of prior data, if any? I know Paul touched on the relative benefit versus placebo, but can you say something about absolute numbers, was this kind of what you expected?

And then secondly can you also shed some more light on the variability? How much was there, was it due to baseline CRP levels or you just don't know at this time?

John W. Varian

Yes. The answer to your last question, we don’t know at this time. The variability just relates to the range of responses we saw in the placebo group as well as the active group earlier on. But as you can see from the arrow bars, the variability at least in the physical function score as actually started to diminish with time, which is really encouraging when we look at this.

The magnitude of the factors I mentioned probably I looked at the trials in the literature, there are also lot of trials that goes for 6 months on hand osteoarthritis. So I’ve see one, actually it was a two month study done on diclofenac gel, and diclofenac gel actually has the indication of hand osteoarthritis. In that particular trial they showed about a 10% placebo just a differences from placebo. So the placebo response was greater, was up 35% placebo response versus about a 45% active benefit.

So if you look at the difference from placebo, it was right on the money with what we saw. So this is in the range and generally in osteoarthritis trails especially the pain component because of the variability generally you don’t see much more than a 10% improvement compared to placebo response.

So in that perspective I think this is comparable to what we’ve seen. Again we’re hopeful if the divergence continues with six months and according to our experts you shouldn’t expect to see a maximum effect of three months, then the effect could actually grow to be larger. But it is really important to say though that for these patients – these EOA patients nothing else is really working for them. The patients as Paul point out 80% of the patients who came into our study were on no background therapy. Patients go on opioid just to recover the pain and so having an effective 10% points better than placebo as we are kind of seeing in our studies. It is pretty impactful for patients who have nothing else that they can use.

Adnan Butt – RBC Capital Markets

So based upon what you have seen today, you couldn't set an expectation for the upcoming study with lower CRP levels?

John W. Varian

No, we just don’t predict, we actually believe in seeing the data.

Adnan Butt – RBC Capital Markets

And Paul, the absolute numbers that you mentioned, was that based on AUSCAN or was that based on a different?

Paul D. Rubin

Yes, interestingly that was based on AUSCAN.

Adnan Butt – RBC Capital Markets

Okay.

Paul D. Rubin

That’s quite relevant. But diclofenac study was on AUSCAN.

Adnan Butt – RBC Capital Markets

And the last question. For the potential Phase 3 design, you mentioned 230 patients in each arm, so it's one-to-one randomization?

Paul D. Rubin

Well, yes, the one-to-one randomization again when we looked at the magnitude effect and the variability we believe we can achieve statistical power with 230 patients per group one-to-one randomization.

Adnan Butt – RBC Capital Markets

Okay. I'll get back in line. Thanks.

Paul D. Rubin

Okay.

Operator

Thank you. Our next question comes from the line of Graig Suvannavejh with MLV & Company. Your line is now open.

Graig Suvannavejh – MLV & Co

Good afternoon, guys. Thanks for taking my questions and congrats on the data. I have just a couple. One just has to – if we could just go back to the powering assumptions on the trial, I believe it was like 80% powered, it showed a 15% difference between active and placebo. Was that at a three months time point or is that meant at the six month time point?

John W. Varian

That was meant for the three month time point.

Graig Suvannavejh – MLV & Co

Okay. And so the 9% adjusted difference, I'm sure you would have loved to have seen more, but is that something you're feeling very comfortable with that at this stage?

John W. Varian

It’s certainly in the range of what we had anticipated based upon other osteoarthritis in the hand studies.

Graig Suvannavejh – MLV & Co

Okay. And then because there were a fair number of slides, could you just review just quickly, just the responder rates that you saw in the elevated CRP EOA trial? I'm just trying to get my head around the differences between the 20% improvement, the 50% improvement, and the 70% improvement?

John W. Varian

This is strictly looking at the AUSCAN or either the components in the total. So patients have got a 20%, 70% or a 100% improvement in their AUSCAN score from base line. So again the 70% score according to our experts there were impressed by that even to see that number which is about 10%. They thought that if there is one or two that could have been random. But the fact that it was essentially six to zero, suggest to them that this is real.

Graig Suvannavejh – MLV & Co

Okay. And then maybe my last question just has to do with the disease itself in EOA, but do these patients, do they auto-resolve on their own or do they how does the disease manifest itself just generally speaking?

John W. Varian

Well, certainly the severity can wax and wane because in part it’s a function of how much they use their hands. With time – while the disease as acted, it never goes away completely. I think with age though it can burnout when eventually they get ankylosis of their joints. But I think during their active phasing, in order to participate in this trial you had to have a more than a 50 out of a 100 on a digital analog scale for pain. And plus we included the CRP, hopefully as a measure of activity, although that remains to be seen how that correlates.

Graig Suvannavejh – MLV & Co

Okay. Just maybe my last question if I could, just to reiterate what I think I heard before is, given the totality of the data that you've been able to generate for gevokizumab at this stage, did I hear correctly that right now PG sounds like the way to go for sure with EOA kind of we'll see what happens with the six month data and three month non-elevated TRP data?

John W. Varian

Just to speak as a whole, right, our Phase 3 program in non-infectious uveitis is our lead indication. Our next pivotal indication is the decision as of now that we are going into pivotal development for pyoderma gangrenosum now. And we want to learn more in EOA and again we’ve got, the good news is that we’ve got that all kind of way, learn more before we make that decision.

Graig Suvannavejh – MLV & Co

Okay. So when prior guidance has been we'll have a second Phase 3 program announced by the end of the year, it's the PG?

John W. Varian

We just did it today.

Graig Suvannavejh – MLV & Co

Yes, okay. Great. All right. Thanks and congratulations again.

John W. Varian

Thank you so much.

Operator

Thank you. Our next question comes from the line of Matt Kaplan Jr. with Ladenburg Thalmann. You may proceed with your question.

Matt Kaplan – Ladenburg Thalmann & Company

All of a sudden I became a junior. Thanks.

John W. Varian

It might be third before the call is over.

Matt Kaplan – Ladenburg Thalmann & Company

Yeah, I don’t know. So can you give us a little bit better sense in terms of in the EOA study, the use of pain meds and how it differentiated between treatment and placebo groups? And I know you said you recorded the acetaminophen, Tylenol use, but what about people that went off protocol and used opioids and stuff like that?

John W. Varian

As far as I know there were no protocol violations in terms of – but again, I haven’t look at all the data. This is just early day. We don’t have these settlements in data entering into the data base, yet. So we won’t have that yet so that will take a few more weeks until we have that analysis.

Matt Kaplan – Ladenburg Thalmann & Company

But they couldn't come into the study on any other medicines besides Tylenol, correct?

John W. Varian

Yes, at entry there were no background medication. And as you suggested that used any medication it would have been a protocol violation and no patients were removed from the study due to protocol violation that I am aware of. I can go back.

Matt Kaplan – Ladenburg Thalmann & Company

Even on placebo?

John W. Varian

Correct.

Matt Kaplan – Ladenburg Thalmann & Company

Now it seems to be as you described it high rate of variability and a large amount of overlap in terms of the error bars, in terms of the response the 2 different groups, and can you give us a sense in terms of why you're confident you think you'll continue to see maybe a tightening of those error bars over the six month period versus the three months period and what should we expect I guess at six months?

John W. Varian

Yes, well it’s two things. I think that it’s just looking at other studies and hand osteoarthritis and then it’s not typical to see high placebo response for the first three months that dissipates with time. So what we’re banking is that the historic observation that in these studies, placebo response both decreases as well as decreases in the variability of it’s response as well as the benefit of on active drug should increase that makes us think that if this behaves the way there are other studies in this disease behaved and we should be in good shape.

Matt Kaplan – Ladenburg Thalmann & Company

Now did the severity of the patient's do you think impact the placebo response that you had here in terms of…?

John W. Varian

Well, in terms of that Matt, as you see we only saw around 10% to 15% placebo response which is kind of low for a pain trial.

Matt Kaplan – Ladenburg Thalmann & Company

All right, but…

John W. Varian

But I think the reflex of these patients don’t respond very well to medication. They are used to getting a lot of stuff. But even in that setting there still is some placebo response.

Matt Kaplan – Ladenburg Thalmann & Company

Just to shift gears a little bit, in terms of the PG study, can you give us a little bit more detail in terms of patients number three and four , the two patients that, I guess one didn't respond at all and the second one had a little bit more of a muted response compared to the first two.

John W. Varian

Yes.

Matt Kaplan – Ladenburg Thalmann & Company

What differentiates those two in terms of let's call them non-responders or low responders from the first two that had dramatic results?

John W. Varian

It’s an interesting question. And the fact that two out of four had this amazing response, atypical for this type of disease. We had the other patient, the patient that didn’t respond we had their photos looked by two experts in pyoderma gangrenosum. Both of them felt that when you look to the edges of their disease, there wasn’t much in the way of active information and then in fact even the diagnosis itself might not be pyoderma angrenosum. So they in fact did look different, which should be very helpful when we design a pivotal trial in terms of the entry criteria.

Matt Kaplan - Ladenburg Thalmann & Company

Right, right.

John W. Varian

And the third patient did show a response in what the way to see it might continue to improve over the three month period. And we’re seeing an effect that dramatic in 20 days and 66 days is not typical and in fact you can’t see it, but only on very high dose corticosteroid therapy.

Matt Kaplan - Ladenburg Thalmann & Company

So typically in terms of time to resolution of these flares or exacerbations you don't see it that quickly?

John W. Varian

You don’t see it and we also think I pressed these express channel because they ever these patients respond on this matter spontaneously in the absence of therapy. Then every export I spoke with that just doesn’t happen.

Matt Kaplan - Ladenburg Thalmann & Company

Okay. And typically it's over a course of several months or 6 months as it resolves?

John W. Varian

If you look in the literature there was a paper done that came out of the U.K. that looked at pyoderma gangrenosum patients and their typical time to respond. The average was about 11.5 months.

Matt Kaplan – Ladenburg Thalmann & Company

Okay, well thanks for taking my questions. One other just follow-up on a different topic, can you give us a quick update on how the enrollment in NIU is going?

John W. Varian

So we’re going to have our quarterly update call next week I believe it is November 7, we’ve announced that, I just did. And so at that point in time we’ll give an update on the financials on the non-infectious uveitis clinical program and some other matters. But we’ll do that next week. We want to focus on these clinical results.

Matt Kaplan – Ladenburg Thalmann & Company

Great. Thanks for the questions.

John W. Varian

Welcome. So that was our question period. I really appreciate everybody who joined the call today and the very good questions that we got. As you can imagine, it’s not often in this business, you actually get to see pictures of the potential impact of your drug on patients. In this case, if you remember we got to see the picture of the patients, the seven patients who ever in the Behcet's uveitis study and now we have these pictures of patients who’ve been treated with gevokizumab, who have pyoderma gangrenosum and pustular psoriasis.

And I can tell you for sure that as we see in these pictures and this clinical data evolve over these last few months, it’s gotten us very excited here at XOMA and the physicians involved in these study. They’ve gotten very excited. But I think even more than the excitement, it really had a very profound impact on us at a personal level, because it really reminds us of why we do what we. And you see these picture and you imagine what these people’s lives were like when they were at their worst and then seeing them progress and hopefully do the gevokizumab. We hope it is.

To see how different their lives must be now, it really has again a profound impact on all of this here. And so we’re doing something important here and we’re going to continue to work hard to do important things and so thanks everyone again for being part of the call and we will be talking to you next week.

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Source: XOMA's CEO Presents at Phase 2 Clinical Results Conference (Transcript)
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