Dyax's CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb.28.14 | About: Dyax Corp. (DYAX)

Dyax Corp. (NASDAQ:DYAX)

Q4 2013 Earnings Conference Call

February 28, 2014 09:00 ET

Executives

Jennifer Robinson - Associate Director, Investor Relations and Corporate Communications

Gustav Christiansen - President and Chief Executive Officer

Dr. Burt Adelman - Executive Vice President, Research and Development and Chief Medical Officer

Rick Berard - Senior Vice President, Commercial

George Migausky - Chief Financial Officer

Analysts

Phil Nadeau - Cowen & Company

Christopher Marai - Wedbush

Serge Belanger - Needham & Company

Operator

Good morning, and welcome ladies and gentlemen to the Dyax Corp’s Fourth Quarter and Full Year 2013 Financial Results Call. (Operator Instructions)

Before turning the call over to Gustav Christiansen, President and Chief Executive Officer of Dyax, the company would now like to read the forward-looking statements.

Jennifer Robinson - Associate Director, Investor Relations and Corporate Communications

This morning Dyax issued a press release concerning its fourth quarter and full year 2013 financial results. Dyax would like to remind everyone that statements made today reflect current expectations, estimates and projections about its products, programs, collaborations, strategies and financial performance and are forward-looking statements. These statements, including those related to Dyax’s commercial product KALBITOR and its clinical stage product candidate DX-2930 are subject to risks and uncertainties that could cause actual events and results to differ materially. Important information concerning these risks and uncertainties is contained in Dyax’s press release today and described or referred to in its most recent Form 10-K or other periodic reports filed with the SEC and are also available on the company’s website at www.dyax.com.

I will now turn the call over to Gustav Christiansen, President and CEO of Dyax. Gustav?

Gustav Christiansen - President and Chief Executive Officer

Thank you, Jen. Good morning, everyone and welcome to our fourth quarter and full year 2013 financial results conference call. On today’s call, we will review our financial performance over the past year, we will discuss important upcoming milestones and we will provide financial guidance for 2014.

Last year was a very productive year for Dyax. We achieved the number of milestones including the entry of DX-2930 into human clinical trials, continued profitability of the KALBITOR business, progression of the Licensing and Funded Research Program or as we call it the LFRP and strengthening of the balance sheet.

Looking forward to 2014, we remained focused on our key area of expertise, namely the plasma kallikrein pathway. We are well-positioned to continue to serve the HAE community by providing KALBITOR treatment of acute HAE attacks as well as continuing to develop DX-2930 for prophylactic treatment of HAE. In 2014, we expect to grow KALBITOR sales and cash flow. Our guidance for KALBITOR in 2014 is $44 million to $49 million. Earlier this week, we presented the results of our Phase 1 study of DX-2930.

In a few minutes, we will review highlights from the data. The study met all its goals and we remain on track to begin the Phase 1b trial of DX-2930 in HAE patients mid 2014. Lastly, as the LFRP continues to mature, there are several key events in 2014 to look forward to, including regulatory milestones and multiple data readouts from candidates in the portfolio.

For more detail on our accomplishments during 2013 and the promising year ahead, we will now turn the call over to our executive management team. First, Dr. Burt Adelman, Executive Vice President of Research and Development and Chief Medical Officer, will discuss our research and development activities. Then Rick Berard, Senior Vice President, Commercial will discuss the highlights from the KALBITOR sales and marketing efforts in the U.S. Lastly, George Migausky, Chief Financial Officer, will discuss the LFRP as well as present our financial highlights and financial guidance. Following these updates, I will provide summary remarks and then open the line for questions and answers.

At this time, I will turn the call over to Burt who will review the progress of DX-2930 and our biomarker assay program.

Dr. Burt Adelman - Executive Vice President, Research and Development and Chief Medical Officer

Thank you, Gustav and good morning everyone. I imagine most if not all of you were on the line Tuesday evening when we presented the results from our completed Phase 1a study of DX-2930. I hope you are all still as excited as we are about these first in human DX-2930 data.

Our experience in HAE learned through the introduction of KALBITOR whose scientific name is ecallantide and the ongoing development of DX-2930 has taught us that each patient with this disorder is best served by having the opportunity to choose amongst various treatment options, both acute and preventive. By having choices and being part of the decision process, patients are able to better gain control of their illness. Current preventive therapies are not consistently effective and many patients find they must supplement chronic therapy with additional acute treatments. We believe this efficacy gap defines the opportunity for better prophylactic options. Beginning with its discovery, our primary objective for DX-2930 has been to develop a product that would be an effective, convenient and well-tolerated prophylactic treatment for patients with HAE.

Let me briefly summarize what we know to-date about DX-2930. For a comprehensive review of the DX-2930 Phase 1a study results, you can refer to the presentations that we have posted on the Dyax website. The purpose our Phase 1a study in normal individuals was to establish critical pharmacokinetic parameters and to identify any early safety signals associated with DX-2930 exposure. This was a single-dose study enabled by our 28-day toxicology studies. There were four dosing cohorts ranging from 0.1 to 3 milligram per kilogram, with a total of 32 subjects enrolled.

DX-2930 was administered by subcutaneous injection. Each cohort was comprised of six subjects treated with active drug and two subjects treated with placebo. Follow-up lasted 16 weeks. DX-2930 was well-tolerated following single subcutaneous injections of 0.1, 0.3, 1 and 3 milligram per kilogram. There was no evidence of any dose-limiting toxicity. The most common adverse event reported after dosing was headache, which occurred in the equal rate of 25% in both DX-2930 and placebo groups. Pharmacokinetic data demonstrated that DX-2930 accumulates in plasma in a predictable, linear dose-dependent manner. The plasma half-life was long ranging between 17 and 20 days across the dose groups.

Pharmacodynamic data were derived from two independent ex vivo assays. These data demonstrate dose and time-dependent inhibition of plasma kallikrein in a manner that parallels the plasma concentration data. There is no proven surrogate market to guide drug development in HAE. Final proof of efficacy requires a well-controlled clinical trial in affected patients. However, we believe there are existing data that can be used to guide us toward the correct DX-2930 therapeutic plasma concentration that must be maintained to prevent HAE attacks. In particular, we believe knowledge gained during our development of ecallantide is informative. Ecallantide is a short-acting plasma kallikrein inhibitor approved in the U.S. for treatment of acute HAE attacks.

At the usual therapeutic dose, the average peak ecallantide concentration in plasma is 80 nanomolar, we can apply this 80 nanomolar target to DX-2930, because DX-2930 and ecallantide are equally potent in human plasma at this concentration. Data from our Phase 1a study indicates that a single subcutaneous injection of 3 milligram per kilogram DX-2930 can result in a plasma concentration that exceeds the 80 nanomolar target for as long as 10 days.

PK modeling indicates for example that a dose of 3 milligram per kilogram given once every 28 days can result in a steady state concentration consistently at or above 80 nanomolar. This example is intended to demonstrate the dosing options available when developing a drug candidate with a long half-life and consistent bioavailability. Obviously, these projections are theoretical. And as I have already said, a well-controlled efficacy study is necessary to determine the correct therapeutic dose.

Now, let’s review the emerging therapeutic profile of DX-2930 and see how it stacks up against the key attributes of an effective prophylactic agent for HAE. First is the target plasma kallikrein relevant to prophylactic treatment of HAE. We believe the answer is yes, HAE attack results from aberrant activation of the contact activation system and plasma kallikrein is the central enzyme in that pathway. Further supportive evidence comes from the clinical efficacy above ecallantide and human C1 inhibitor replacement therapy, but a definitive answer requires a Phase 2 proof-of-concept study.

Second, well DX-2930 be safe during chronic use. We have engineered DX-2930 to bind the plasma kallikrein with high affinity and to be highly specific for its target. This will limit the possibility of off target toxic effects. Preclinical testing has demonstrated that DX-2930 is well tolerated at high doses and over extended periods of time, and DX-2930 appears to be well tolerated in normal subjects given single doses. Obviously, only extensive clinical testing can provide a final and definitive answer to this question.

Third, the DX-2930 has a PK profile that will enable persistent exposure at that necessary therapeutic plasma level. DX-2930 has a long half life, approximately 20 days and behaves predictably across a range of doses. This long half life will allow infrequent dosing and facilitate maintenance of a stable therapeutic blood level. So, we think the answer to this question is likely to be yes, again treatment of patients with HAE will provide a definitive answer.

Fourth, will DX-2930 be available in a dosage form convenient for patient self-administration. To-date, we have been able to formulate DX-2930 at 100 milligrams per milliliter. Higher concentrations are being evaluated in ongoing stability studies. We believe DX-2930 will be formulated so it can be self-administered by infrequent 1 to 1.5 milligram injection. So at this time, we believe that DX-2930 is making great progress against this list of key attributes. Our next trial will be a Phase 1b blinded multicenter repeat dose and dose escalation study exploring DX-2930 in patients with HAE.

We plan to accrue patients into three fixed dose groups. Each group will have approximately four DX-2930 and two placebo treated patients. The primary purpose of this study will be to gain additional safety and PK date in the target patient population. We will also use our biomarker assay to access the possible impact of DX-2930 on basal plasma kallikrein activity in HAE patients. We plan to start accrual of this trial mid-year.

Now just to remind you about one of the other exciting projects we are working on here at Dyax. We remained very enthusiastic about the role of our western blot assay and identifying other plasma kallikrein mediated disorders. We are currently testing plasma samples from various inflammatory and autoimmune diseases and expect to share preliminary data with you mid-year 2014.

So with that, I’ll turn the call over to Rick Berard to provide highlights from our KALBITOR business. Rick?

Rick Berard - Senior Vice President, Commercial

Thank you, Burt. The KALBITOR business finished 2013 with full year revenues of $40.5 million. The fourth quarter of 2013 produced strong results, $12.6 million in revenues, which was driven by higher patient utilization. Patient demand units which are units sold by distributors to hospitals or patients increased in the fourth quarter by approximately 11% compared to the third quarter of 2013, in the fourth quarter, we added 37 new patients.

Going forward, we will continue to differentiate KALBITOR as a novel HAE therapy targeting the source of acute attacks combined with unmatched patient services. Our marketing efforts will focus on patients and physicians who want comprehensive services to support an individualized monitored and robust treatment plan for managing acute HAE attacks. Our signature service program, KALBITOR Home Infusion Services remains an important driver for the KALBITOR business. This service provides a convenient, supervised, at-home treatment solution administered by knowledgeable infusion nurses. The program continues to evolve including expansion in the currently uncovered areas in U.S. We are also enhancing other patient service offerings such as financial assistance in nursing education services.

In late 2013, the U.S. HAE Association published recommendations for the management of hereditary angioedema. These peer-reviewed recommendations conclude that every HAE patient should have an individualized comprehensive treatment plan, consult with a physician specializing in HAE, monitor their HAE treatment and attacks and have access to effective on-demand treatment. These guidelines are consistent with programs established at Dyax that we believe best serve the HAE community. Our high-touch programs along with product clinical benefits will continue to differentiate KALBITOR in the marketplace.

George will now discuss the LFRP and walk you through our financial highlights.

George Migausky - Chief Financial Officer

Thank you, Rick. Before I review the financials, let me begin by updating you on the Licensing and Funded Research portfolio. The LFRP continues to mature and we are looking forward to a number of catalysts for the portfolio in 2014 and in fact the first of these is already unfolded.

Last week, Eli Lilly reported positive results from the REVEL trial, its global Phase 3 study of ramucirumab in combination with chemotherapy in patients with second line non-small cell lung cancer. The study results demonstrated a statistically significant improvement in the primary endpoint of overall survival in the ramucirumab plus docetaxel arm. Accompanying the announcement of these results, Lilly communicated their plans to present data from the REVEL trial at an upcoming scientific meeting and that they intend to submit the first application of these data to regulatory authorities in 2014.

Ramucirumab also has a number of other upcoming regulatory milestones and data readouts. Although we anticipate FDA action on their filing for ramucirumab as a single agent for the treatment of advanced gastric cancer in the second quarter of 2014. And if approved, Lilly could potentially launch ramucirumab for this indication in 2014. Lilly plans to file a BLA and MAA with the respective regulatory authorities in 2014 on the positive results from the RAINBOW study, a Phase 3 trial with ramucirumab in combination with paclitaxel for the treatment of advanced gastric cancer. And ramucirumab is currently being evaluated in two ongoing Phase 3 clinical trials, both of which are expected to report top line data during the next 18 months.

First is data from the REACH trial in liver cancer, which is expected in the second half of this year and then data from the RAISE trial in metastatic colorectal cancer expected in 2015. Necitumumab, another Phase 3 candidate of Lilly’s reported positive top line data in 2013 for SQUIRE, the study for first line treatment in patients with squamous cell lung cancer. They plan to present the full dataset mid year and submit a regulatory filing by the end of 2014. And then in addition to these Phase 3 programs in the portfolio, we anticipate data readouts this year from our licensees, Biogen Idec for their lingo trial in acute optic neuritis and for Merrimack with their MM-121 trial in breast cancer. For Dyax, the potential of these is significant. We are eligible to receive a 2% to 3% royalty net to Dyax on the first 10 years of commercial sales. And given that there are large markets being targeted, this amounts to significant potential revenues over time. And it provides both near and long-term value for Dyax.

Now, moving on to our financials. I will first take you through the fourth quarter and full year 2013 financial results and then our financial guidance for 2014. So as reported earlier this morning, our total revenue for the fourth quarter 2013 was $16.9 million compared to $16 million for the same quarter in 2012. Fourth quarter 2013 KALBITOR net sales were $12.6 million as compared to $11.8 million last year. And the net sales in the fourth quarter of 2013, which represents shipments to our distributors, also reflects an equivalent amount of patient demand during the quarter and unlike some recent quarters reflects a limited reduction in distributor channel inventory.

For the full year 2013, total revenue was $53.9 million compared to $54.7 million in 2012 and KALBITOR net sales were $40.5 million compared to $39.8 million in 2012. Looking at the year-over-year comparison of KALBITOR sales, the most notable component of change between 2012 and 2013 was the patient demand units increased by 16% in 2013, which equates to approximately $5.8 million in sales. Offsetting that sales increase were the significant distributor channel adjustments made during the year.

And looking forward, we would not anticipate there will be significant distributor channel adjustments during 2014. KALBITOR’s Q4 net sales of $12.6 million are a net of adjustments of approximately $1.8 million or 12.6% of the gross sales. And this gross to net adjustment primarily reflects the effective distributor discounts, government patient rebates and patient assistance programs. Going forward, we anticipate the gross to net sales adjustments in 2014 to be in the range of 12% to 15%.

With respect to operating expenses, which includes the cost of goods sold, research and development and SG&A costs, for the fourth quarter of 2013 they were $16.1 million compared to $18.1 million last year and for the full year operating expenses were $71.1 million compared to $73.5 million in 2012. For the fourth quarter of 2013 Dyax reported a net loss of $2 million or $0.02 per share and this compares to a net loss of $4.8 million or $0.05 per share in the fourth quarter of 2012. And for the full year 2013 Dyax net loss was $27.8 million or $0.26 per share as compared to a net loss of $29.3 million or $0.30 per share for the year 2012.

Our common shares outstanding at year end December 31, 2013 totaled $121.7 million and this excludes the outstanding preferred shares that are convertible into approximately 4.1 million shares of the common stock. Our operating cash burn for the fourth quarter of 2013, it was similar to our net loss at approximately $2 million. With respect to our cash resources as of December 31, 2013, we had cash, cash equivalents and short-term investments totaling $111.4 million and that’s exclusive of restricted cash.

Let me turn now to the 2014 financial guidance. For revenue, our top line total revenue for 2014 is expected to be in the range $53 million to $59 million. And this guidance includes KALBITOR net sales of $44 million to $49 million. And to provide some context for this financial guidance, our top line revenue does not include any royalties which may be earned from sales of LFRP product candidates such as ramucirumab should have received marketing approval in 2014. And for our KALBITOR sales, we know that there is significant variability in the rate at which HAE patients use KALBITOR to treat their acute attacks. This was demonstrated during 2013 when we experienced a low rate of patient usage during the first quarter and subsequently experienced a high rate of usage during the fourth quarter.

So accordingly we do not rely on that fourth quarter of 2013 net sales as a benchmark for 2014 rather the 2014 annual guidance uses the average treatment rate realized during 2013 and this incorporates the potential for quarterly variability. Our additional guidance for 2014 is with respect to our operating costs. Our 2014 operating costs and that is the cost of product sales, the research and development expenses and the SG&A costs they are expected to be in the range of $72 million to $75 million.

Now, I’ll turn the call back to Gustav.

Gustav Christensen - President and Chief Executive Officer

Thank you, George. For all the reasons that have been discussed 2013 was a transformative year for Dyax. Our strategy and our goals are clear and focused and we’re looking forward to another exciting year here at Dyax. We have a number of catalysts to look forward to, including the initiation of our Phase 1b for DX-29 in HAE patients mid-year, growing KALBITOR sales and cash flow, preliminary data from our biomarker assay program in this order is other than HAE, also mid 2014. And finally we expect a number of data and regulatory milestones from the Phase 3 and Phase 2 candidate in LFRP. We are indeed leveraging our know-how and expertise. We are driving the business forward and we are building on our momentum.

We look forward to updating you on our progress as a year unfolds and with that I will turn the call over to questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Phil Nadeau from Cowen & Company. Your line is now open.

Phil Nadeau - Cowen & Company

Good morning. Thanks for taking my questions. First one on the LFRP, appreciate you said that do you have a 2% to 3% royalty for 10 years and I’m also wondering whether there is any milestone payments associated with regulatory approvals for the product candidates?

Gustav Christensen

Thank you, Phil. Good morning. George, you want to take that?

George Migausky

Yeah, Phil, there is – there are some milestones, but they are relatively modest so, really the more significant economics are associated with the royalties.

Phil Nadeau – Cowen & Company

Okay, great. And then second, I did want to ask you, but your KALBITOR guidance for 2014, it seems like if you basically take the 2013 number assume, another 16% increase in patients you sort to get to the midpoint of the guidance, but this year was really heavily impacted by inventory issues so, that it does seem like you’re guiding towards a deceleration in KALBITOR patient growth. I wonder if that interpretation is correct and whether – and why that would be if you’re just being conservative or if there are factors out there, you see that suggest 2014 might have slower patient adds than 2013.

Gustav Christensen

George, you want to…

George Migausky

Yes. So, when we look at the patient adds that incorporates the treatment rate that which all patients are utilizing the drug and in fact the most significant impact on revenues really is around the treatment rate, more so than patient adds. So, patients adds really is a secondary factor and so we really focus on the treatment rate, we know there is variability around that treatment rate, we saw it as I pointed out during 2013 in different quarters also and looking at annual guidance we’ve really used our 2013 treatment rate for the year as the basis is the one of the primary basis for establishing that.

Phil Nadeau - Cowen & Company

Okay, great, that’s very fair. One last question on 2930, I was wondering if you could give us your early initial impressions on what pivotal trial need to look like there. I appreciate this early, but most assuming that the type of trial that our pharma did – is probably no longer acceptable so what do your thoughts on likely design maybe?

Gustav Christensen

Yes, hey, good morning, Phil. So I certainly agree with the last comment that 28 or so patient crossover study is not going to fly anymore. I don’t – what I would say is we will finish the Phase 1b study, we may have some interesting biomarker data from that and we will sit down with the agency and try to understand what it is they want in an orphan disease space and then really be able to have an intelligent conversation with you guys. Obviously, we are opened and we want to be flexible and we want to get to the end as quickly as possible. And I think that’s better, the efficacy is certainly the easier it is to prove their works. But there is going to be some fundamental milestone of numbers of patients treated for how long, that they are going to tell is critical. And I don’t know the answer to that yet. So it’s still just guessing.

Phil Nadeau – Cowen & Company

Okay, that’s fair enough.

Dr. Burt Adelman

I am sorry I can’t be better about that. But trust me we have got some ideas. And then they will be data driven and we will go down there and we will defend our position.

Phil Nadeau – Cowen & Company

Great, thanks. Fair enough. Thank you.

Operator

Thank you. And our next question comes from the line of Christopher Marai from Wedbush. Your line is now open.

Christopher Marai - Wedbush

Good morning. Thanks for taking my questions and congrats on the quarter. You had mentioned your plasma kallikrein assay that you guys are working on and looking at other disorders given the system. I was wondering when you look at new disease opportunities here, how are you thinking about potential market, given obviously that HAE is a rare disease and likely DX-2930 would likely command premium price, do you have other candidates that you are looking at that might address these disorders, could you maybe help us with your thinking in that respect? Thanks.

Dr. Burt Adelman

So great question and I hope I have that problem and I will give it to Gustav when we have that problem because it will be his, not mine. But what I would say, the half the answer to that question is, right now we are pursuing the clinical scientific hypothesis. So we are out there doing everything we can to get specimens from as many autoimmune inflammatory disorders as we can both at resting and during an acute flare to see what the signals look like. We are also happened to see and I think I mentioned to you or some of you are also quite interested in the rare disorder of systemic mastocytosis, the non-malignant forms, which is another orphan disease, because those patients have acute attacks of abdominal pain and dysfunction that look a little bit like an abdominal HAE attack. Obviously, every one of those indications except systemic mastocytosis is significantly larger numbers of patients. Then the question is if we find one or two of these indications and if we run a clinical trial and we find that the drug has meaningful efficacy then the question is would the drug be a sort of sub-acute intervention, so would you give it during flares or would it be a chronic therapy. The therapeutic profile would be consistent with either, because as an anti-inflammatory that is not immunosuppressant there shouldn’t be any problem with adding a drug like 2930 chronically to steroids Imuran, Methotrexate or TNF inhibitor, all of that will hopefully be rationally decided by data driven results. Now I will punt to Gustav who might give you some better insight than I could on how we would approach this from a sort of commercial and marketing perspective.

Gustav Christensen

Thanks for the punt. So we have in our research group, we are developing various molecules with short and long half-lives that can be used in these diseases. So we will make an assessment as to what would the pricing point be for these various diseases and what type of molecule would be best suited. So that’s really part of the overall research strategy to have a number of options to move forward with. We may use 2930 to prove the principle, but then we will have various options of various molecules that may allow us to have different price points for some of the same activities.

Christopher Marai - Wedbush

Yes, that’s helpful. And just with regards to that, though you noted potentially acute versus prophylactic or long-term treatment, do you imagine potentially being able to repurpose KALBITOR in some of these diseases?

Dr. Burt Adelman

No. Good question and we thought about whether at least in a test system we might. I think the problem is that KALBITOR has just got way too short a half-life. And these disorders driving the underlying pathobiology in a flare particularly if you are flaring while on full dose immune suppressant therapies, so think of a Crohn’s or UC patient on steroids in TNF or on methotrexate and TNF inhibitor nonetheless flaring. It’s hard for me to believe that you would get a meaningful response in one of those patients simply by giving them an injection of a drug like KALBITOR or even any of the short-acting drugs, because they just – they are not there long enough.

Christopher Marai - Wedbush Securities

Great. Well, it’s very helpful. Thanks for taking my questions.

Gustav Christiansen

Yes. Thank you, Chris.

Operator

Thank you. And our next question comes from the line of Serge Belanger from Needham & Company. Your line is now open.

Serge Belanger - Needham & Company

Hi, good morning. Just a couple of questions on KALBITOR, you didn’t mention anything about inventory stocking, so I am going to assume it’s been normalized since the third quarter?

Gustav Christiansen

Yes. In fact, during Q4 the sales in Q4, while those sales that’s to our distributors, it also equates pretty much to patient demand as well. So the channel adjustment by the distributor has been negligible.

Serge Belanger - Needham & Company

Okay. And I think in prior quarters, you had talked about patient adds being around 50, I think for the last couple of months, is that changed – is that something that you expect going forward?

Rich Berard

Yes, hi Serge, this is Rick. So the range was somewhere around 40 to 50 is what it’s been. And what we reported for Q4 was we were slightly below that at 37, but we put it for the year within our guidance we will be back in the 40 to 50 range.

Serge Belanger - Needham & Company

Okay. And then I know that KALBITOR franchise is profitable and is cash flow positive, just trying to get an idea of how marketing sensitive it is, I mean, I guess at the midpoint of your range, you are expecting about low to mid 15% growth from 2013 levels, just trying to get an idea by adding some marketing dollars for you to push that up?

Rich Berard

I think it’s fair to say that we plan for ‘14 that the increase in our revenues, are flowing straightforwardly down to the bottom line. And that includes all expenses remember, so there is not just marketing and sales expenses there it’s medical support expenses and so on also involved in it, but if we look at the overall expenses associated with the capital business, the growth in sales in ‘14 will flow down to the cash flow line.

Serge Belanger - Needham & Company

Okay, alright. Thank you.

Rich Berard

Thank you.

Operator

Thank you. And our next question comes from the line of Michael Yee from RBC Capital Markets. Your line is now open.

Unidentified Analyst

Hi, this is (indiscernible) on behalf of Michael. Our question has to do with the design of the Phase 1b study, the PK and PD just released Phase 1 as well as the P1, but the half-life supports publicly every full week dosing? So are you comfortable and but then you are testing three different dose groups, so I am just trying to understand how you are thinking about varying your dose versus your administration schedules in Phase 1b? And secondarily, any experience with HAE patients, what is the inter-patient variability in their PK/PD, because the ranges were really tight in healthy volunteers, but I am just trying to understand whether that dose parameters translate in HAE patients? Thank you.

Dr. Burt Adelman

Hey, thanks. This is Burt. Those are the right questions. So the 1b study will be a dose escalation study, where each individual is given a dose of placebo or one of the chosen DX-2930 doses and they will be given it on Day 1 and Day 14, so only be given two doses. The reason for this is that we haven’t fully filed our long-term non-human primate preclinical tox studies with the FDA, matter of fact, we have just completed them. The reports are just coming in. So we can’t – we don’t have the preclinical coverage yet to expose patients for anymore than say two doses, because with this drug and a long half-life, a two-dose exposure is probably going to give people two or three months of residual drug exposure. The purpose of the study is to answer the second question you asked, which is are the PK parameters essentially identical in HAE patients to what we saw in normal individuals. And there is the possibility that we do know that these patients have some aberrant basal plasma kallikrein generation, because their two-chain high molecular weight kininogen levels are above those of normal individuals even when they are not having an attack. So there is the possibility that they may have more rapid half – they may have a shorter half-life or more likely not that they would have a shorter half life, but that they would have a somewhat blunted Cmax for any given dose, but we are just going to find out that’s why we are doing the study. We will also be measuring – using our Western blot assay, we will be looking at two-chain levels in these patients throughout the study to see if any of the doses that we administered suppress the two-chain levels.

And then I think you asked me sort of intrinsically about variability within the patient population and there is some evidence using the Western blot assay that we are using that patients who have very high frequency of attacks have a higher basal level of plasma kallikrein activity even when they are not having an attack than patients who rarely have an attack. We hope in this study to basically accrue patients who tend to have more than fewer attacks. So we will be biased toward people who have active disease, but it will really be in the Phase 2 study when we can get to multi-dosing over an extended period of time that we will focus on what we think might be therapeutic dosing strategies for patients, who will be exposed for extended periods of time. In that study, we will start thinking about loading dose strategies and whether it’s best to take the drug every other week or once a month, but you are also absolutely right, if our guesstimate that the therapeutic – the minimum therapeutic plasma concentration is about 80 nanomolar, we certainly know by modeling that the average patient should get to that therapeutic level with 3 milligram per kilogram dose given once a month.

Just one additional note is that in this Phase 1b study, we are actually going to move from weight-adjusted dosing, that is 1 or 3 milligram per kilogram to fixed dosing very typical at biologics and we will be giving at the high dose probably a single 300 milligram dose rather than a 3 milligram per kilogram dose.

Unidentified Analyst

Thank you. That’s very helpful. And just so I am clear, the preclinical data that would support multi-dose dosing, so I think you are going to file to the FDA soon, so that wouldn’t be a gating factor for when you start Phase 2?

Dr. Burt Adelman

Absolutely not, that’s right. We will be filing – we will be filing those data probably before the middle of the year and we will be all set in 2015 to start our extended exposure or multi-dose Phase 2 study.

Unidentified Analyst

Perfect, thank you. Thank you so much.

Dr. Burt Adelman

Yes, sure.

Operator

Thank you. And I am showing no further questions at this time. I would now like to turn the call back over to Gustav Christensen for closing remarks.

Gustav Christiansen - President and Chief Executive Officer

Well, I then want to thank all of you for listening in today and I wish you all a good day. And again, we look forward to updating you on the progress as the year unfolds. Thank you all. Have a good day.

Operator

Thank you. Ladies and gentlemen, thank you for participation in today’s conference. This does conclude the program. You may all disconnect. Everyone have a good day.

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