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BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)

Q1 2010 Earnings Call

April 28, 2010 11:00 am ET

Executives

Robert Bennett - IR

Jon Stonehouse - CEO

Bill Sheridan - CMO

Stuart Grant - CFO

Analysts

Charles Duncan - JMP Securities

Bret Holley - Oppenheimer

Steve Byrne - Merrill Lynch

Bill Pottery - DFL

Steven Harr - Morgan Stanley

Ren Benjamin - Rodman

Joseph Schwartz - Leerink Swann

Michael Murphy - New World Investor

Operator

Welcome to today's BioCryst first quarter 2010 conference call. Today's call is being recorded. At this time for opening remarks and introduction, I'll turn the call over to Mr. Robert Bennett. Please go ahead, sir.

Robert Bennett

Thank you and good morning. Welcome to BioCryst first quarter 2010 financial results conference call and corporate update. Today's press release are available on our website at biocryst.com. At this time, all participants are in a listen-only mode. Later we will open up the call for questions. Instructions for Q&A will be provided at that time.

Joining me today on the call are Jon Stonehouse, our Chief Executive Officer; Bill Sheridan, our Chief Medical Officer; and Stuart Grant, Chief Financial Officer.

Before we begin, I'll read a formal statement regarding risk factors associated with today's call. Today's conference call will contain forward-looking statements, including statements regarding future results, unaudited and forward-looking financial information and the company's performance or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation.

You should not place undue reliance on the forward-looking statements. For additional information, including important risk factors, please refer to BioCryst's documents filed with the SEC, which can be found on our company website.

Following an overview of Q1 results and developments by Jon Stonehouse and Stuart Grant, Bill Sheridan will then discuss the interim results from the first part of our BCX4208 Phase 2a study in patients with gout. Then we will open up the call for Q&A.

With that, I'll turn the call over to Jon.

Jon Stonehouse

Thanks Rob. Good morning and thanks for joining us today. Since our year-end 2009 call on February 4th we continued to execute our plan to build an enduring successful biopharmaceutical company. Our primary focus remains on transforming our pipeline by advancing our late stage development programs and by initiating new clinical programs over the next few years. The positive results announced today from the first part of our BCX4208 gout study represent an important step forward.

In addition our II i.v. peramivir Phase 3 studies in hospitalized patients intended to support US filing are proceeding as plan. Assuming flu infection rates were turned to adverse levels during the upcoming southern and northern hemisphere season the two studies should reach their enrollment target during the first half of 2011.

We are continuing discussions with the FDA and HHS regarding other studies or data analysis that could provide additional evidence of efficacy for the peramivir development program.

In the first quarter we received a final regulatory milestone of $7 million from Shionogi associated with the marketing authorization of peramivir as well as the first royalty payment from Shionogi for their initial sales of RAPIACTA in Japan of $700,000.

The January launch in Japan coincided with the period of very low flu incidence and this royalty for the quarter reflects the low flu activity. What’s important is that RAPIACTA is now on the market in Japan and we have a strong partner that’s well prepared to compete in this important market, when flu picks up again and inevitably it will.

Lastly we are on track to report top line data from our four clinical studies during 2010. These includes two BCX4208 gout studies, the on going monotherapy dose-ranging study and a combination study of BCX4208 and allopurinol as well as II forodesine oncology studies, the Pivotal CTCL and exploratory Phase II CLL study. We look forward to sharing our results later this year.

I would like to turn it over to Stuart to cover our financials.

Stuart Grant

I will keep my comments regarding the recent quarter results and our cash position brief. From a financial perspective, we are on track to deliver our cash guidance for the year and that will support the clinical program we are outlining for you today.

Key contributors to the quarter, $26.1 million of revenue, it includes $10.7 million under the HHS development contract for peramivir, the $7 million Shionogi in milestone impairment, John mentioned and $6.4 million in collaboration revenue from the sale of peramivir API to Shionogi and Green Cross.

Total revenues in last year's quarter were $4.4 million. R&D expenses were up due to a second consecutive quarter of peramivir Phase III development activity and BCX4208 gout trial cost as well as $6.3 million from the same process of the peramivir API for a partner Venezia.

G&A expenses were higher mainly due to consulting fees related to supply chain and process optimization projects. G&A expenses supporting planned activities are expected to trend down from the Q1 level for net loss of $2.6 million, compared to $9.3 million in the same quarter last year. The use of cash during the first quarter was 4.8 million and our outlook cash use of between $25 million and 30 million for 2010 remains unchanged.

Now, Bill, our Chief Medical Officer will talk about the BCX4208 gout results.

Bill Sheridan

Thanks, Stuart. We are pleased to share with you today positive top line results from a planned interim analysis of our ongoing Phase 2a gout study of BCX4208. BCX4208 is a next-generation only earlier purine nucleoside phosphorylase or PNP inhibitor, which has shown those dependent reduction in uric acid levels in the blood in previous studies that had healthy individual psoriasis.

We originally announced plan for this randomized double-blind placebo-controlled study to evaluate the efficacy and safety of BCX4208 in patients with gout at the end of September. Part one of the study, randomized 60 gout patients with serum uric acid greater than or equal to 8 milligrams per deciliter to either placebo or to one of three doses of BCX4208, administered once-daily for 21 days. Part two of the study is designed to sequentially evaluate the safety and efficacy of up to three higher doses and is now underway.

The BCX 4208 doses studied in part one was 40 milligrams, 80 milligrams and 120 milligrams per day. As part of the screening process, all study subjects completed a 30 day washout period during which they did not receive a urate-lowering therapy. Additionally, all subjects received gout flare prophylaxis prior to and during the entire period of blinded study drug administration.

The protocol specified primary endpoint in this study is the change in serum uric acid concentration from baseline assisted the day 22 visit. All three doses of BCX4208 demonstrated a statistically significant reduction in serum uric acid levels compared to placebo in each case with T-values less than 0.001.

As shown in the table included in today's press release, the median reduction in uric acid concentration ranged from 2.7 milligrams per deciliter for the 40 milligram dose to 3.4 milligrams per deciliter for the 120 milligrams dose compared to 0.4 milligrams per deciliter in the placebo group.

We also evaluated the proportion of all subject in each treatment group to achieve serum uric acid levels below 6 milligrams per deciliter at the day 22 visit. The protocol designed secondary efficacy endpoint.

This proportion ranged from 31% for the 120 milligram group to 36% for the 80 milligram group. No patient in the placebo group achieved this goal.

In addition, we performed a post hoc subset analysis that included patients whose baseline uric acid levels were less than 10 mg/dL. The median baseline serum uric acid level across the study population ranged from 9.2 to 9.7 mg/dL. Randomization was not clarified by baseline uric acid level and the number of patients with uric acid levels less than 10 mg/dL at baseline, therefore varied from 8 to 13 in age group.

The total of 41 of 60 subjects or 68% had baseline uric acid level below 10 mg/dL. For these 41 patients the proportion reached uric acid level less than 6 mg/dL range from 30% to 63% in the different BCX4208 dose groups. Again none of the patients in the placebo group achieved this goal.

We have evaluated safety with regular clinical and laboratory examinations, including blood chemistry and hematology, including lymphocyte counts in all patients. BCX4208 was generally safe and well tolerated at the doses and duration evaluated in the story. All 60 subjects completed the study.

Overall, the frequency of adverse events in each of the BCX4208 treatment groups is comparable to that observed in placebo group. The incidence of gout flares observed was low in all study groups.

Reductions in peripheral blood lymphocytes were observed in patients treated with BCX4208. The study protocol included stopping rules to study drug administration when CD4+ cell count still below certain thresholds. No subjects were discontinued due to low CD4+ cell counts. Additional studies designed to evaluate longer term exposure are needed to further define the safety and tolerability profile of BCX4208.

In summary, we are pleased with these interim finding which support continued development of BCX4208 in gout subject.

We have and we’ll work with our investigators to submit the findings for presentation at the upcoming scientific meeting and have initiated part 2 of the study and intend to announce top line results when that Phase is completed. The encouraging efficacy and safety findings in this study will also support proceeding with an additional trial to evaluate BCX4208 as monotherapy and in combination with allopurinol to determine if in addition of xanthine oxidase and PNP has an additive effect in reducing uric acid in gout patients.

We intend to share top line data from this combination study in the fourth quarter this year. Together these two studies should define dosing suitable for longer term exposure studies of BCX4208 in patients with gout. We look forward to providing you with further updates as new data become available.

Jon Stonehouse

Thanks, Bill. The execution of our 2010 clinical plan is off to a good start. In addition to delivering these promising interim results from our first gout study, we completed the enrollment in our two forodesine oncology studies. For the remainder of 2010 we expect to complete the ongoing gout study in the coming months and to report top line data from the combination study of BCX4208 and allopurinol in the fourth quarter.

In oncology we plan to report data from the pivotal study of forodesine in patients with cutaneous T-Cell lymphoma and the exploratory Phase 2 study of forodesine in patients with CLL in the second half of this year.

With that we’ll open it for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Charles Duncan from JMP Securities.

Charles Duncan - JMP Securities

My first questions are on 4208; first of all, Bill, I am wondering if you could give us a little bit more color on the changes in white cell blood counts? Basically what was the stopping rule?

Bill Sheridan

Hi Charles. The stopping rule, had two components, one based on total lymphocyte count, falling below 500, the other one based on CD4 positive cell count, falling below 350, and the rule was to confirm that, that observation was correct with a repeat text and it confirmed when the patient was to be removed from that drug administration.

Charles Duncan - JMP Securities

Then you did disclose that you saw some changes but none other patients reached the stopping role. I guess my question is with the next steps moving up in those do you think that you have got enough headroom to be able to see some efficacy at the higher doses, with these stopping rules?

Bill Sheridan

I think there is, it is step wise approach. So, we are very comfortable in moving up to the next dose planned in the study, so that's been initiated and after it reaches sequential cohort, we will take a look at the data and make a decision based on the safety. We've already proven efficacy in part A of the study and we all will see due course whether additional dosing will result in higher rates of [metabolic] uric acid and a greater proportion of patients of with gout.

So we certainly think that's worth doing, and absolutely we think its worth doing a combination therapy study to the program and just to a further comment on lymphocytes, clearly because of the mechanism of action this is an anticipated pharmacologic action of this class of agent and it can be a modulatory effect. We don't whether that's going to be potentially beneficial in gout patients either. So we need to keep that in the back of their mind.

Charles Duncan - JMP Securities

I was going to say it looks like you've got pretty competitive advocacy at the lower doses, what's your thought about the interaction with say, allopurinol, do you think that there is potential for a synergistic effect or an additive effect given the differences in mechanism?

Jon Stonehouse

Allopurinol works on the xanthine oxidase enzyme and BCX4208 works on a different enzyme purine nucleoside phosphorylase. They're both in the pathway of purine nucleoside degradation, but ultimately resulting in uric acid. So that experiment is definitely worth conducting and it's we can't do that particular experiment in animals, because animals don't make uric acid, they destroy it with another enzyme, but the clinical experiment is required and it's definitely worth doing and we believe there is potential for an additive or synergistic effect.

Charles Duncan - JMP Securities

Could you also review with us for in terms of 4208, the discovery platform, do you think that there's some additional compounds that could come out or off-the-shelf out of your platform?

Jon Stonehouse

I think one of the things hopefully investors are starting to see with BioCryst is we're much more than a Blue company. The evidence of another molecule BCX4208 having the efficacy on 0.7, we were hoping for exciting to step forward, but where our platform company is structure-based drug design and there are number of additional molecules that we're currently reviewing and hope to bring forward and given you an update on that this summer.

Operator

Our next question comes from the line of Bret Holley from Oppenheimer.

Bret Holley - Oppenheimer

I was wondering just temporarily within the 21 days, whether there was a plateau in the lymphocyte reductions or did you get kind of a continual reduction. Can you give us a little bit of information on that?

Bill Sheridan

The action on uric acid is quite prompt and in this study we had evaluations of baseline, 24 hours after the first study drug administration and also a week one and you do appear to have a plateau as barely as one week after the initiation of therapy with BCX4208 and even the day 2 values do show a difference compared to baseline. So we don’t need long term studies to confirm efficacy here. We need long term studies to ore fully evaluate the safety and tolerability profile and the action in combination with other drugs and as the program unfolds, demonstrating efficacy is not going to be a problem.

Bret Holley - Oppenheimer

My question was more along the lymphocyte reductions and whether you actually saw a plateau in the reductions there and/or in some kind of rebound in those lymphocyte counts over the 21 day period?

Bill Sheridan

So, three weeks would be too short probably to see a full effect on lymphocytes and we need longer term studies to fully evaluate that. There are different lymphocyte compartments and they are quite lonely so it might circulate back and forth between the tissues and the blood. So in that previous [derived] study, it's possible we might have seen a plateau in 6 weeks but in future studies we plan longer term administration of the order of 3 months to 6 months and we will make decisions about that as we see the data from the current program unfold.

Bret Holley - Oppenheimer

Okay, and did you actually see any infections on the drug arm in the --?

Bill Sheridan

Several subjects had viral upper respiratory tract infection or had cold, in other words and in light of that, it was no different comparing placebo and BCX4208 treated subjects.

Operator

Our next question comes from Steve Byrne from Merrill Lynch.

Steve Byrne - Merrill Lynch

I have another one for you. If you were to segment the patients based on the degree of renal impairment, did you see any differences between the treatment arms and/or tolerance or safety signals.

Bill Sheridan

The eligibility criteria of the study, they included creatinine clearance criterion on the serum creatinine. So subjects were eligible and patients were eligible where they had a renal function that was at least 50% as normal. We had not done the analysis, we're just suggesting, that will be something we'll do when we finish the study and have the full data to hand across all the cohorts, but we don’t anticipate any issue with renal function from the safety perspective with this class of agents on the basis of their experience with forodesine and BCX4208. BCX4208 is partly cleared by renal excretion and as the program becomes more mature, we'll define the dosing is necessary to adjust in renal impaired patients is may or may not be necessary. We'll define that as the program matures.

Steve Byrne - Merrill Lynch

With respect to the lymphocyte reduction was there a dose response relationship that differed materially from the dose response relationship you saw with serum uric reduction?

Bill Sheridan

I think broadly the lymphocyte count reduction is similar across the different BCX4208 arms. It's also worth emphasizing that it's a different type of an assay. The natural variability in lymphocytes in the blood is much, much greater than the natural variability of uric acid from day to day. So as we accumulate more patients and test the higher doses, there is in fact any relationship between dosing and lymphocyte effect when got all of the data to hand, but right now it looks pretty flat.

Steve Byrne - Merrill Lynch

And I have just one more for Stuart, was the $300,000 of product sales, was that just a ruminant of the US government order in the fourth quarter or you actually picking up a new customer here?

Stuart Grant

That was no US government there were small order, a small variety of different countries.

Operator

Our next question comes from [Bill Pottery from DFL].

Bill Pottery - DFL

Two questions, first on peramivir, your language is a little bit on the cautious side, you seem assuming and should that in the event that the assumptions play out falsely and the study is unable to read out in the timeframe that you described, do we just simply push it back in to the US hemisphere for the following flu season or how do we think about when the date is most likely to be reportable?

Bill Sheridan

I think that’s when studying these acute seasonal infectious disease you are totally reliant on the disease cooperating and we can’t predict with any degree of accuracy the start of the flu season. So you base your planning assumptions on averages and just so if we get average flu season we should define with the timeline we projected. Obviously if we have base pandemics or epidemics or big seasonal flu, we might be able to finish it a bit earlier but honestly I think we’re going to need a full (treat) season. If the flu is not up to expectations then that will have an impact.

Bill Pottery - DFL

The impact would not be underline the result, to exclude do we simply just push it out.

Jon Stonehouse

This is John and we just continue to follow flu around the globe.

Bill Pottery - DFL

Okay.

Jon Stonehouse

If it didn’t finish in the Northern Hemisphere we go to the Southern. Our strategy remains that we want to file sometime in the end of 2011, early part of 2012. So comes the 2012 flu season we have a drug approved and on the market assuming that the trial results are positive and the FDA approved. So that’s our strategy and we are just trying to be realistic, we have done enough for the studies for now to know there are bumper craft seasons for flu and later flu season that when we just got want to be realistic about the incidence flu and how affects our trial.

Bill Pottery - DFL

Absolutely make sense and I appreciate the clarification. Quickly on 4208 understanding the PNP biology and its effect on CD4 positive versus CD8, CD20, CD56. Is there a particular lineage that is more susceptible to an early effect that can give you a signal is to whether or not there is going to be more propound level downstream effect on B and T-cells or they all fairly uniform in terms of their responsiveness to therapy and their responsiveness to the production side rather than the consumption side of B and T-cells?

Jon Stonehouse

So, in this program we are measuring CD4, CD8, CD20 and CD56 positive cells fits, it would be premature come to conclusion to that whether one or other subsidies more affected. So, I would like to say the full study results before interpreting the guide as I mentioned before. There is a quite a lot of day-to-day variability in these counts even in normal pivotal. We don’t have anything else going on.

With regard to what’s important I think two things are important in thinking about lymphocyte counts. One is what are the clinical consequences that might be adverse with regard to mild to moderate suppression of lymphocyte counts and the only way to answer that question is to do lab study. So, that’s really a Phase 3 question.

The second thing is important is whether or not immunomodulatory effect of the drug might actually will be beneficial in (inaudible) inflammatory disease like gout. That’s one of the reasons we wanted to study BCX4208 in this population. There are cytokines made by inflammatory sales stimulated by lymphocyte in these types of disease. We did know way of looking at that in informative way in our labs, so that's something we'll pay attention to in terms of the incidents of go gap placed lock in that study.

Bill Pottery - DFL

Can you just remind us of when we'd likely to have this information presented in the peramivir study?

Jon Stonehouse

We haven't made a final decision as to where to submit it. Obviously it's too late to utilize, so you can count that out, but (inaudible) was in March, and there are other opportunities later in the year like ICR and others and we'll work without top investigators to get abstract written and submitted to appropriate place.

Operator

Our next question comes from the line of Steven Harr from Morgan Stanley.

Steven Harr - Morgan Stanley

One follow-up. Some of my questions have been going along here, so the drug you've used that is renal and excretive really gout patients have mix renal functions, can you help us understand from what you're seeing today how variable CD4 counts are within a dose, so how much risk do you have as you go into a more real world population that you're going to take patients into a zone where maybe you and physicians and regulators are comfortable.

Jon Stonehouse

Just a small correction first. The drug is partly renal excreted, so as this program matures, we'll define the appropriate dosing in subjects with renal antenna, and you know the threatening is a common standard Biochem panel, so get that essentially all the equation, so it's not an additional burden for the healthcare system or the provider of the patient to understand what is their renal function before they embark on a new therapy that's part of normal medical practice. And on a part those can be selected based on the time of calls you program that will accompany the development of the drug. So I am quite confident we will able to work that out. So the dosing might or might not have to be amended. It will be strike forward.

Now, the second part here is to do with the variability of CD4 and where we need to pay attention for that once the drug is on the market. I think that’s an interesting question that we will be able to answer during the Phase III program and, for example, if the Phase III program turns out to be a combination therapy or add-on partners of program, now the dose of BCX4208 required might be large and the probability or the risk of having a CD4 count be differently large, obviously, we can find that in the (inaudible) studies and whether or not that’s important remains to be seen.

So I think that these questions are good but they are not answerable in full at this stage of the development program.

Steven Harr - Morgan Stanley

I am sorry, I wasn’t trying to get a pulse of marketing and I think this is an answerable question. How much variability are you seeing, I want to understand, if you go from 40 to 80 to 120, do we have direct?

Stuart Grant

No.

Steven Harr - Morgan Stanley

Adding to what the CD4 count will do and then how close are you to. 350 isn't exactly the, I think it allows you more comfortable or higher but are you getting close that even within some patients with that dose? And is there are clear dose response on CD4 count to-date?

Stuart Grant

In this dose range, there is not a clear dose response in any of the lymphocyte subsets. I think that the sample size and the natural variability maybe its cure. No, it might be one but we need 78 more days of that. And what we can see so far, the answer to the question is, no. Are we getting close? The baseline for CD4 varies a lot over a huge range. So people who start off with a relatively lower CD4 might be at more chance of falling below a certain threshold value than people who set up with the higher one. So we're bound to see subject as we escalate the dose. It must be crystal-clear. We're bound to see people for below 350 and so the question is how often does that happen, what are the baseline factors that are associated with that. You have alluded to one potential factor and we will look at over those questions.

I think another important thing and maybe just didn’t come up strongly enough in the prior comments is to see the full effect on lymphocytes, you need longer term administration of the drug. So I would caution against extrapolating three-week data to beat the final conclusion to anything on lymphocytes and we'll do those longer term studies.

Operator

Our next question comes from Ren Benjamin from Rodman.

Ren Benjamin - Rodman

Can you just give us an idea as to what the therapeutic landscape looks like? Just a broad brush stroke, is it a pretty crowded field? Would you have to go after, let say niche type of patients? How would you differentiate itself from other products that are out there?

Bill Sheridan

In talking with the expert who advises us our sense of the field right now is it's still pretty much allopurinol first-line therapy. That drug has been around for many decades. It's well understood. Most people are pretty comfortable with using it, and then there is a group of patients that must be quite large actually who don’t achieve the therapeutic goal with allopurinol, some of those patients in the rheumatology offices has been difficult to manage. And our sense is it's pretty difficult to compete against the chief generic first-line therapy and second-line therapy either as an add-on or a combination or a therapy, I think all of that’s still open with BCX4208, its where we are thinking about the landscape. I think you know its great to see advances in the field here and there are obviously there is a new drug that’s been introduced to the market that’s another xanthine oxidase inhibitor. They take lot of cases that’s been underdevelopment so the field is moving forward after several weeks of this stagnation

Jon Stonehouse

Yes, one of things that I think we're encouraged by seeing a big company like Takeda really start to advocate early treatment and going after the primary care physicians because that’s something a little company like BioCryst can’t generate. So, hopefully, we’ll see more people getting treatment in a timely fashion as a result of that and we certainly thinks there is still a lot of room for new drugs to come board and certainly a speed that which we get these trials in rousing enthusiasm that investigators have shown as an indicator in that.

Ren Benjamin - Rodman

Can you talk a little bit about the longest of preclinical [top] studies have been carried out and would you need to go longer and potentially what’s the longest dosing that that timeframe patients would need to be evaluated on?

Bill Sheridan

So, you know, there is non-clinical safety program, it’s a drug development keep going when you are in clinical development. Its doesn’t stop when you follow the IND obviously. So obviously the studies we have currently are well supported by our non-clinical safety program and we intend to get it in six month human studies. Certainly that will be possible in next year.

Ren Benjamin - Rodman

So, the six month animal (toxicity) studies here are either just ongoing or have they been completed or are they about to start?

Bill Sheridan

They are maturing and we’ll have all of the answers to support our six month clinical program in 2011.

Operator

Our next question comes from Joseph Schwartz from Leerink Swann.

Joseph Schwartz - Leerink Swann

I was wondering if you had any reasons to think that the dose response curve is now linear and you are on the low part of in that shaped curve or something. Why go higher with the lack of the dose response that we have been so far if there is theoretical concern about of infections at some point?

Bill Sheridan

It is not a Phase 3 study. It is the Phase 2 study. In Phase 2 development one of the objectives is to lineate over fairly broad range dose response fixed both on efficacy and safety issues. We are very comfortable with short-term administration in doing that and that will help to bracket the doses that we have eventually pick for full development and we will support the ultimate NDA and oversees applications and justify choices of doses of Phase 3 and the commercialization. It remains to be seen, whether those higher doses are suitable for full development or not. I mean maybe they will, maybe won’t, but it is important at this stage of development to bracket the doses that you might want to use in the future.

Joseph Schwartz - Leerink Swann

Can you remind us of the half life in the event that you do see any adverse events or infections ability to stop and reverse, where it is and then how is it metabolize and what is the kinetics like upon repeat dosing?

Bill Sheridan

Let’s start with your last question first. You reached steady state within a fairly short time and in thinking about what happens when you stop dosing I’d say two things. One is the drug is going to be excrete from the system relatively quickly. The half life supports once a day dosing without any problem and then so the drug will from the system relatively quickly. Lymphocytes special cell thick in the body and they made in the bone marrow and the thymus gland and you can ramp up the lymphocyte production in response to an infection extremely quickly in lymph nodes and so on, so the turnover of that compartment is what's going to determine how quickly lymphocytes recovery.

For example, I'm sure you're familiar with Rituximab, Rituxan malignancies Genentech drug, and if you use Rituxan, you really want that B cells, and once you stop the drug it takes month for the B cell compartment to recover. It's not because the drug do it. It's just because it takes months for that compartment to recover, so the effect of PNP inhibitors lymphocyte compartment is nowhere near strong as walking out B cells, but it's still true that it takes in different compartments of lymphocyte is still dependent on how quickly that lymphocyte compartment recovers once you remove the agent from the body. That's got nothing to with the drug have what anymore.

Joseph Schwartz - Leerink Swann

That's helpful. I know Roche had this for a long time, what did they learn about drug interactions and the ability to combine with the drug allopurinol?

Jon Stonehouse

I'm not sure, which drug you are referring to. Still 4208?

Joseph Schwartz - Leerink Swann

Yeah, still just 4208.

Jon Stonehouse

They didn't study using gout at all, so there was no program to develop the drug in gout, there were no interaction studies with that material.

Bill Sheridan

The one thing I would say that we got from Roche was a pretty robust preclinical package and a lot of detailed work that they did in studying the drug prior to the psoriasis studies that they've done.

Joseph Schwartz - Leerink Swann

The metabolism, is it complementary or is it competitive in any way with allopurinol?

Bill Sheridan

No. We don't anticipate any drug interactions based on the pharmacology or the--.

Operator

Our next question comes from the line of Michael Murphy from New World Investor.

Michael Murphy - New World Investor

I have a couple of questions about peramivir, but first, I just wondered what the follow up is on the missing earnings estimate. I know you talked in the first call in early March and it's been almost two months. Since that estimate was missing and I wonder what their explanation is?

Stuart Grant

Look, can we get that question again?

Michael Murphy - New World Investor

Yeah. The missing earnings estimate, I know in early March, talked to first call about why the high estimate went missing and it still hasn’t appeared again and I wondered what their explanation for that is?

Bill Sheridan

I never really, I mean there is no explanation that we have. There hasn’t been active follow up on that.

Michael Murphy - New World Investor

Okay, on peramivir, you said your discussion with the FDA, other data analysis that could support the filing, does that include analyzing the results from EUA usage?

Bill Sheridan

There is a broad range of possibilities here. That might be one of them but I think that EUA is a very specific event under the PREP act. We don’t have any direct access to those data. So there are other trials under consideration and those discussions are ongoing. So it would be premature to get into the data.

Michael Murphy - New World Investor

Okay, I was glad to see you have the systems in place to book the Shionogi in the same quarter that they booked the sales rather than after a one quarter delay and I wondered if you can give us more detail on the break points on the royalty schedule or when you might be able to do that?

Bill Sheridan

And so we signed it, yes it was encouraging for me as well to see we have been Shionogi and our sales to be able to do that the way the contracts start, we feel confident that we should book that revenue without any risk of future adjustments. We've given publicly under the contract between 10% and 20%. We haven’t broken that out, Michael, I am sorry.

Michael Murphy - New World Investor

No, that’s okay. And the southern hemisphere flu season, can you just quickly review which countries appear likely to use peramivir or have committed to it? And if you can comment on any prospective countries that are in the evaluation process?

Jon Stonehouse

The way we can describe it is, there is a set of countries that we're working with for the clinical studies, and then through our partners we got relationships around stockpile and like I would say, we’ve been in conversation on our own for Australia. Our partner moksha8 is having conversations with Brazil and then there is whole list of countries that we are working with in terms of clinical study Australia, New Zealand, South Africa and some South American countries.

Michael Murphy - New World Investor

My final question, you may not be able to do this, but I wondered if you could comment on 4208 results compared to ARDEA's gout results that were released at the end of March.

Bill Sheridan

Sure. We'll make couple of comments. I think the studies are different and you always needed by a way of signal before comparing different studies. There are few differences in the design. Their study excluded patients, who were overproducers of uric acid, it was restricted to under excreted. We had no such exclusion criterion. They study with dose titration experiment as is not as of the parallel group randomization with no dose titration in individual subjects. So, broadly speaking, I think that the range of uric acid reductions is similar would be the comment I would make, but you need to be aware of the differences in design between studies.

Operator

Our next question is follow-up from Joseph Schwartz from Leerink Swann.

Joseph Schwartz -Leerink Swann

You just answered my question about the royalty rate for peramivir, but I was wondering if you could just give us a sense of the pricing and where that’s stand in Japan?

Bill Sheridan

Yes, so the pricing is about double what Tamiflu is in Japan, so it’s around US $65 for single course of 300 milligrams. So we think, remember that the Japanese government sets pricing in Japan. So the fact that they got a [floppy] premium over existing therapies in the market and that’s a pretty sign. Then as I said in my prepared comments, the real key is when flu is back, which we know it will come back. We are both confident that [they now need] the right partner and prepare to compete effectively with RAPIACTA

Operator

(Operator Instructions) It appears so no questions in the queue.

Jon Stonehouse

So, I’ll go ahead and ramp up if there aren’t any more questions. So, again I want to thank you everybody for you participations today and just remind everybody that our goal at BioCryst is to build an enduring successful biopharmaceutical company. I think the progress we have made in the first quarter and the result of our first BCX4208 study in gout are a very nice step forward towards that goal. So thank you for your interest in BioCryst and we’ll keep you updated as the year progresses.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may all disconnect. Have a nice great day.

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Source: BioCryst Pharmaceuticals, Inc. Q1 2010 Earnings Call Transcript
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