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Receptos, Inc. (NASDAQ:RCPT)

Q4 2013 Earnings Conference Call

March 5, 2014 5:00 AM ET

Executives

Faheem Hasnain – President and Chief Executive Officer

Graham Cooper – Chief Financial Officer

Sheila Gujrathi – Chief Medical Officer

Analysts

Koon C. Ching – Credit Suisse Securities

Marko K. Kozul – Leerink Partners, LLC

Liana Moussatos – Wedbush Securities, Inc.

Operator

Good day ladies and gentlemen, and welcome to the Receptos Fourth Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the call over to Faheem Hasnain, President and Chief Executive Officer. Please go ahead sir.

Faheem Hasnain

Good afternoon and thanks everyone for joining us for the Receptos fourth quarter 2013 earnings call. With me today are Graham Cooper, our Chief Financial Officer and Sheila Gujrathi, our Chief Medical Officer. Today’s call is also being webcast live on our website and will be available for replay until March 17th.

Before we begin I'll ask Graham to handle the forward-looking statement disclaimer. Graham will walk you through our financial results, followed by an update on our clinical development program that Sheila and I will cover. And after that, we’re happy to take any questions you might have. Graham?

Graham Cooper

Thanks Faheem. Please note that except for statements of historical facts, the statements in this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer on the company’s earnings press release issued after the close of market today, as well as the risk factors in the company’s SEC filings included in our Form 10-K for the year ended December 31, 2013 that will be filed shortly.

Undue reliance should not be placed on forward-looking statements which speak only as of the date they are made and the facts and circumstances underlying these forward-looking statements may change. Except as required by law, Receptos disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances.

I will turn to the financial results for the fourth quarter. For the three months ended December 31, 2013, Receptos reported a net loss of $15.2 million or $0.86 per share compared to a net loss of $4.5 million or $3.08 a share for the fourth quarter of 2012.

Total revenues for the fourth quarter 2013 were $773,000, compared to $3.8 million for the fourth quarter of 2012. Total operating expenses for the fourth quarter of 2013 were $15.9 million compared to $8.3 million for the fourth quarter of 2012.

R&D expenses were $12.6 million for the fourth quarter of 2013 compared to $7.5 million for the fourth quarter of 2012. The increase in R&D expense is primarily related to increased Phase 2 clinical trial activity, commencement of the Phase 2 trial of RPC1063 in ulcerative colitis and start up costs related to the Phase 2 portion of our Phase 2/3 trial of RPC1063 in multiple sclerosis. .

G&A expenses were $3.2 million for the fourth quarter of 2013 compared to $803,000 for the fourth quarter of 2012. The increase in G&A cost is primarily related to an increase in personnel costs, additional stock comp expense and additional expenditures on outside services, including consulting, legal and accounting fees, market research and insurance.

As of December 31, 2013, Receptos had $69.5 million in cash equivalents and short-term investments and debt with a principal balance of $4.9 million. In early 2014 we completed an follow-on equity offering, the net proceeds of which were $110 million approximately. This substantially strengthened the financial position of the company. The pro forma cash and cash equivalent balance as of December 31, 2013, including the net proceeds of the offering was approximately $179 million.

Following the completion of the January offering, we had a total of 22.2 million shares outstanding or approximately 23.1 million shares on a fully diluted basis at today’s share price.

I will now hand the call back to Faheem.

Faheem Hasnain

Thanks Graham. So there are three major topics that I want to cover on the call today. First, with regard to RPC1063 in multiple sclerosis, I want to remind you of where we stand with the program and the important data that we expect to report later this year. I’ll also cover the opportunity for RPC1063 in ulcerative colitis which we believe is substantial and probably under appreciated by the market.

And, finally, I’ll give you an update on our pipeline programs, including our anti IL-13 antibody for eosiniphilic esophagitis as well as our GLP-1 Receptor Modulator Program. I’ll then ask Sheila to provide some further details on our clinical progress across these programs including the new trials that we have in the works.

So as you’re aware, we completed enrollment of the Phase 2 portion of RADIANCE and relapsing MS in October and performed an interim analysis of the data in the fourth quarter of 2013. This was an important milestone for our company. As a result of this review and based on the confidence that we took from the preliminary data, we chose to initiate the Phase 3 portion of RADIANCE in relapsing MS. I’ll ask Sheila to review with you the interim analysis in a moment.

As you will recall, we have a SPA from the FDA on this trial which is designed to enroll 1,200 patients with relapsing multiple sclerosis to treatment with orally administrated RPC1063 or injectable Avonex.

The primary end point of this first Phase 3 trial is annualized relapse rate after two years of treatment. Initiating this trial before the completion of the Phase 2 trial should allow us to greatly compress the overall development timeline as we are able to hit the ground running with site that have already been actively enrolling in the Phase 2 trial.

Our second Phase 3 trial which has also received this SPA from the FDA is designed with a one year primary end point. And as such we do not expect it to be rate limiting. We expect that if the data continue to payout as hoped, RPC1063 can potentially be the next S1P1 receptor modulator into the market behind Gilenya.

Now speaking of Gilenya, as you know the markets for oral therapies continues to take shape. Oral therapies are solidifying their position in the market. Now exceeding 25% of the total scripts in the U.S. and growing every quarter.

Gilenya produced $1.9 million in sales in 2013 up from $1.2 billion in 2012 and its market share in the U.S. has increased even in the Phase of the Tecfidera launch. It now represents approximately 10% of the total U.S. market share on a scripts basis and the analysts are projecting that it will continue to grow significantly.

Tecfidera has also become an important factor in the market for oral MS therapies that achieved $876 million in sales in 2013 and exited the year with nearly 15% market share. Similar to Gilenya, analysts are projecting blockbuster status for Tecfidera as more and more patients make the switch to oral therapies.

So this shift in market share is coming with the expense of the legacy injectable therapies all of which have seen market share declines in the past 12 months. So clearly, there continues to be a need for next generation oral therapies especially those that improve upon the current standard of care.

While the current oral therapies do offer improved efficacy and convenience, they have a number of safety and tolerability issues which limit their uptick. In the case of Tecfidera, patients often experience tolerability issues including GI flushing and in the case of Gilenya there continues to be a negative perception as to say a good safety profile. Unfortunately, there is no cure for patients infected with MS.

Patients start on a drug and generally continue until they relapse prompting a switch. Now if we’re successful getting up this E-1063 approved, we expect that when it arrives in the market, there will be a substantial group of patients in need of a new world therapy with an enhanced profile versus other approved drugs.

Switching gears a bit, we are also enthusiastic about the opportunity represented by RPC1063 in ulcerative colitis and IBD more generally. Current therapies can be used to treat inflammation in the intestine. However a long term use for these types of anti-inflammatory agents which include injectable and infused biologics is associated with limited durable efficacy and significant side effects.

As a result there remains a significant unmet need for effective and well tolerated new therapies, particularly new oral therapies in the maintenance setting. Now this represents a substantial market opportunity. Let me remind you that the ulcerative colitis market in terms of the number of patients is actually substantially larger than the multiple sclerosis market with approximately 1.1 million patients in the U.S. and approximately 700,000 patients in other native markets.

Now it was also precedent for success of lymphocyte trafficking agents for the treatment of inflammatory bile diseases. As you may know Takeda drugs, vedolizumab is an IV infused biologic which effects the trafficking of similar subpopulations of lymphocytes as RPC1063 does. Thus we view the evidence of clinical efficacy and safety demonstrated by vedolizumab is clinically relevant rational and proof of concept for our approach. In December our joint panel of members from the FDAs GI Drug Advisory Committee nodded to recommend approval of vedolizumb for the treatment of adults with moderately to severely active ulcerative colitis and Crohn's disease

All 21 committee members voted that the benefit there were the risks to support approval for UC and for Crohn’s diseases 20 of the 21 panelist voted to support approval for that indication. The PDUFA date for vedolizumb is in May and based on the mechanism of action of RPC1063 the President of other lymphocyte trafficking agents that have shown us seeing this indication of the test and our overall safety and tolerability profile. We believe that we have the potential to be the first in class and our best in class for the treatment of ulcerative colitis.

And as you would anticipate, if we show efficacy in ulcerative colitis, it would be natural for us to think about pursuing the program into Crohn’s disease as well. The Crohn’s market represents another million or so patients worldwide.

And more broadly as we have advanced the RPC1063 program in both the relapsing MS and ulcerative colitis indication and gained important safety experience with this compound we believe there exist attractive expansion opportunities for this molecule in other areas of neurology and immunology. For example progressive forms of MS maybe addressable with the S1P receptor modulator mechanism.

Novartis is pursuing a Phase III trial Gilenya and primary progressive MS, with data expected in the back half of this year. If that trial is positive, it opens the door for us to pursue that and potentially other neurodegenerative indications with RPC1063. Other study results including positive clinical data in psoriasis with another S1P receptor modulator and preclinical data in a number of animal models including [indiscernible] provide scientific rational, that RPC1063 may work in other immunologic conditions. We are in the planning stages for exploring additional indications that we may purse for RPC1063.

Now finally I’ll touch on our pipeline beyond RPC1063. With regard to our anti-IL-13 antibody, we believe that it has the potential to have an impact in eosinophilic esophagitishagitis, an emerging indication with significant unmet need that has only been recently diagnosed in the last 10 years to 15 years.

Now, while it is still an orphan indication, it has been growing in prevalence as awareness increased. Patients with eosinophilic esophagitishagitis or EoE as we call it, can have a range of symptoms including food impaction, difficulty swallowing and a result in weight loss or failure to thrive.

And while there are no approved therapies, the majority of patients are treated with swallowed steroids, which are associated with a number of side effects and a limited duration of efficacy. This program is Phase II ready. And, we expect that our next step would be to initiate a randomized trial in an EoE patient population and Sheila will comment more about that later.

And while our oral small molecule GLP-1 receptor Allosteric Modulator Program is still early, we are excited nonetheless exited about the novel, mechanistic approach and the sizable opportunity that this innovative program represents. Orally administered lead compounds have shown single agent efficacy in a diabetic disease model, as well as, activity that’s synergistic with metformin in combination studies. And we intend to conduct IND-enabling studies in this program later this year.

So, that’s a thumbnail sketch of our current development programs. I’d like to now ask Sheila to give you an update on some of the specifics in terms of our ongoing and planned clinical trials.

Sheila Gujrathi

Thanks Faheem. I’ll be providing an update on our Phase 2/3 S1P1 receptor modular trial and we will optimize [indiscernible] which we refer to as RADIANCE. As well as a Phase 2 trial called TOUCHSTONE. I’ll then cover our anti-IL-13 antibody program and eosinophilic esophagitishagitis.

And as Faheem noted the headline today is really the favorable results of our interim analysis of the Phase III MS we saw preformed in the fourth quarter of 2013. We have focused our review on several potential product attributes that we believe may represent important differentiation from the other SMP receptor modulators on the market or in development.

We are pleased to report that overall our differentiation profile continues to appear intact including the overall adverse event profile which appeared relatively balanced between 1063 and the placebo group. The cardiovascular profile including the study on heart rate effects, liver enzyme effects and preliminary evidence of clinical activity as well as reduction on lymphocyte count.

Based on the results of that review we made the decision to initiate the Phase 3 portion of the RADIANCE trial. And we randomized our first patient into Phase 3 in late December and since then we have been able to enroll additional patients around the world and the week in the first three weeks of the share.

This first trial is designed as a head-to-head superiority study with two doses of orally administered RPC1063 versus injectable Avonex. We did the same two doses, 0.5 milligram and 1 milligram that we are starting in the Phase 2 trial. The primary endpoint for this trial will be reduction and illustrate after two years of treatment.

The second Phase 3 trial which is designed as a one year study will start after we obtain the top line results of the current Phase 2 trial. Because this trial will be shorter in duration than the first, we expect that we will be able to complete both trials at about the same time in order to optimize our overall development timeline.

So the result of ongoing Phase 2 trial, we continue to expect the full top line results to be available in mid 2014. We involved human entity patients in this study, substantially greater than the 210 plan, as a result of momentum that’s build with investigators in the latter part of the enrolment period.

The primary end point on the placebo control trial is the reduction of a cumulative number of total gadolinium-enhancing lesions determined by MRI from week 12 to week 24 of study treatment.

Now turning to the UC program, we are also conducting a Phase II trial of RPC1063 and patients have modestly daily active also described that. This trial design can enroll about 180 patients, randomized at the same two dose levels of RPC 1063 that is 0.5 milligram and 1 milligram of placebo.

The primary objective of TOUCHSTONE is to compare the efficacy of RPC1063 for the induction of clinical remissions in patients with active ulcerative colitis after 8 weeks of treatment. This trial continues to enroll at pace, and as we have previously stated we expect that we will report the results of this trial in mid-2014 subsequent to the RADIANCE Phase 2 results in relapsing MS.

The FDA has indicated that the results of the study are statistically and clinically persuasive, TOUCHSTONE quick count is one of our Phase III trials in ulcerative colitis, meaning that we would only need then to conduct one additional pivotal induction study and one Phase 2 maintenance study for approval.

So I’ve covered the update on the trials for RPC1063 and relapsing MS and ulcerative colitis. Let me now turn to RPC4046, which is our anti-IL-13 antibody for the treatment of treatment of eosiniphilic esophagitis. As Faheem mentioned, this is an urban indication where treatment options are limited, there appears to be strong scientific rational from a preclinical and clinical basis to support a directed anti-IL-13 therapy in EoE, including esophagitishigil over expression of our IL-13 cytokine, the ability of IL-13 to induce expression of e attacks in 3 and periostin which are the most highly expressed proteins in EoE as well as the ability of IL-13 to promote both inflammation and fibrosis in esophagus.

I want to also remind you that there appears to be validation of this mechanism in other allergic meted disease areas. Specially IL-13 antagonist have demonstrated efficacy in pre-clinical models of allergy and recently have shown clinical activity in asthma and eosinophilic esophagitishagitis patient.

In terms of our clinical development plan, we intend to conduct the Phase II EoE trial as a randomized double blind placebo control study in patients with active EoE. We plan to enroll approximately 90 patients to access two subcutaneous RPC4046 compared to placebo. The primary objective of the Phase II trial will be to determine whether treatment with our molecule is efficacious by histologic improvements of eosinophilic counts at week 12.

We also plan to explore potential PDUFA diagnostic biomarkers for efficacy in this proof-of-concept study. We did hold a successful pre-IND meeting with the GI division of the FDA in December where we obtained agreement on the general design of the non-clinical program and the clinical Phase II study design. And we do plan to file an IND in the first half of 2014. Because Phase I trials have already been conducted for this molecule [indiscernible], we’re trying to treat into the Phase II trial once we’ve filed the IND.

So, that covers the update on our clinical programs, I will now turn the call back to Faheem.

Faheem Hasnain

Thank you Sheila. So to summarize on RPC1063. We continued to execute on the timeline that we laid out at the time of the IPO. We completed the interim review of the Phase II portion of RADIANCE in relapsing MS in December which appear to confirm our differentiation profile and allowed us to trigger the initiation of the first Phase III trial. We continue to expect top-line Phase II results in the middle part of this year and if those results are positive, we plan to initiate the second Phase III trial shortly thereafter.

Now based on our trajectory, we have the potential to be the next S1P1 receptor modulator into the market. A market that’s growing in overall size and where oral therapies appear well positioned to continue to take share from injectable therapies.

We have a large and perhaps even larger opportunity in UC, and IVD generally where our current Phase II trial is also on track to read out in mid-2014 after the relapsing MS data. I do believe that success from this proof-of-concept trial could create an upside for the program that is yet to be fully appreciated given the size of the patient population and the unmet need.

And in addition, we are accessing the attractiveness of other potential indications for RPC1063, neurodegenerative disease, Crohn’s disease and other areas of immunology, were all in the target list for us. We’ll continue to follow the data from preclinical and clinical studies but they’re own and thus conducted by others as they become available.

We will plan to make new investments in follow-on indications for RPC1063 where the data is supportive. And let me remind you that with regard to RPC1063 in all indications, we own 100% of the asset and we have what we believe a strong IP running until 2029 without adding time for data exclusivity.

And with regard to the pipeline beyond RPC1063, we’re making progress in building out the portfolio with other product candidates addressing other therapeutic indications including EoE and Type 2 Diabetes, both of which could represent substantial opportunities whether we pursue them alone or in partnership.

And broadly from a corporate standpoint Receptos has never been stronger, having raised over a $100 million in additional capital in January, we are well funded through the Phase II data and beyond which will allow us strength and flexibility in whatever we choose to do whether it be negotiating favorable partnership terms or taking our programs further into the clinic.

And finally, I want to take a moment to thank the members of the Receptos team that have created all of this progress. We have incredibly engaged, experienced and dedicated team of people that come to work everyday excited and ready to drive our programs forward. I’m extremely appreciated of everyone’s efforts in our share purpose to create meaningful new therapies for patients.

And with that, we’ll be happy to answer your questions.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from Ravi Mehrotra from Credit Suisse.

Koon C. Ching – Credit Suisse Securities

Hi, thank you for taking the question. This is actually Koon asking a question on behalf of Ravi. I just wanted to know if you can provide us with your latest thinking on the confirmatory Phase III trial design for RPC1063 and MS, specifically what might you use as a comparator in that trial. Thank you.

Faheem Hasnain

Sure and thanks Birchenough. Thanks for the question and just to clarifying, I’m going to actually discuss the pivotal trial design for this third pivotal Phase 3 MS, so that’s the Phase 3 portion of RADIANCE. And so the way that study is designed and again it is occurring in more patients, it’s basically already studied, and exploring the two dose level with the 1063 that we had in Phase 2. So the 0.5 milligram and 1.0 milligram dose level compared to Avonex and which doesn’t know and BMI injection is given once a week and it is standard-of-care for MS patients across the globe.

This is a two-year study design, and so the two-year trial duration, and the primarily end- point again is the priority design of reduction in Annualized Relapse Rate at the end of 24 month of treatment. And so that is the current design, and it’s a double-blind, double-dummy design and so patients would be receiving either Avonex or placebo injection and 1063 or placebo 1063.

And for the second pivotal study, our current design is a one year study, that is looking at the two dose over the 1063, again compared to Avonex, and the benefits of this approach are several but one of the primary benefit is that we are going to be able to pull data from both of a pivotal study to increase our products to look at important secondary endpoints of 15 approval from the FDA around this analysis approach doing the process that we had not only for the first pivotal but also the second pivotal study. So we do have a spot again and place for both pivotal studies at this time.

Operator

The next question comes from Marko Kozul from Leerink Partners.

Marko K. Kozul – Leerink Partners, LLC

Everybody congrats on new progress.

Graham Cooper

Thanks Marko.

Marko K. Kozul – Leerink Partners, LLC

Thanks. The question I wanted to ask was on the RMS front for 1063, I think you plan on running a Phase 3 review study against Tecfidera as the active comparator. Could you give us a preview of what you are thinking possible in terms of trial design?

Graham Cooper

Yes, Marko so, we haven’t defined. So we have that trial design yet but let me kind of come back to the base concept. We fundamentally believe that, we have a profile and this certainly is bearing out in a market research with position that we have a profile that can go to toe-to-toe with Tecfidera. In fact, as we – when we got the results from that market research, it really showed that we could see a potentially equivalent share split between patients going either to Tecfidera or RPC1063. So, fundamentally it’s really a marketing question in terms of what level of evidence do we need to bring to the table to kind of further our position and further our story against Tecfidera.

So we wouldn’t do it in the context of a registration of study but doing it has a 3b, I think is a real possibility, it’s a study that we probably wouldn’t need to start around the 2016 timeframe. But we are in the process of really thinking through what our marketing approach would be? What our positioning would be? And thus what further evidence we need to bring beyond the registration of studies. Sheila, if you want to add any comments on that?

Sheila Gujrathi

That really covers our strategic approach, I think in terms of the differentiation assay that we really focused on in terms of demonstrating important data from that study design, we of course didn’t look at efficacy measures and we will look at Annualized Relapse Rate, our disability and our potential improvements and reduction in brain atrophy which we do think overall that mechanism cross of SMP1 receptor modulator test, churn better [indiscernible] areas than Tecfidera.

And then of course we will spend some time characterizing the safety and tolerability advantages, but sensitivity they could offer with Tecfidera, and so all of that would be front and center in terms of we can share videos outline those data element in the studies that we would design.

Marko K. Kozul – Leerink Partners, LLC

Terrific, and I hear if you see follow-up, ulcerative colitis with 1063, could you review for us the Phase II UC trial design and then enrollment criteria for the open-label extension, and then what proportion of patients are transitioning into the expansion and what does this mean or how do they compare to your internal expectations. And then just finally, if you could review for us some dollar terms, the UC markets versus MS, thanks.

Sheila Gujrathi

So, the Phase II UC trial design again called TOUCHSTONE, it’s a purity study, it’s a placebo controlled, doubled-blind randomized global, clinical trial. We are studying at the same two dose levels as 1063 for 0.5 milligram and 1 milligram dose level compared to placebo. During the dose titration period and then eight week treatment period and the primary endpoint of the study is looking at, that’s going superior design induction of clinical emission after eight weeks of treatment.

And so, so the design is it is robust with powered at 180 patients, for that 60 patients for treatment of them, and based on [indiscernible] Phase III design in this indication and this is why we did ask the SK, if to be considered a potential pivotal registration side, because the – trial design in Phase III is identified – is based with similar identical to this approach.

So, the studies are going well and then as you mentioned we have our maintenance, part of that trial design, patient through showing clinical improvement. We are continuing to allow to growth maintenance period and also there is an open-label extension period, where our patients from the double-blind portion or from the maintenance period at any time could go into that open-label extension period. And what I can say today is that there is a number of patients who are crossing over into the maintenance period are meeting our expectations, from a clinical improvement perspective and so everything that we are seeing today in terms of looking at anecdotal data from clinical trial itself we are looking at against the portion of patients, we continue to move forward in the maintenance period, exclusively consistent with other effectively two therapies in terms of data looking from their clinical programs. I think the last part of your question, Marko is around, was that commercial opportunity.

Marko K. Kozul – Leerink Partners LLC

Yes, that’s correct.

Sheila Gujrathi

And so from our perspective, as you mentioned it’s a quite sizeable market and when we’ve done actually market reaching this area since very compelling, as you probably know there are some all therapies that are used in ulcerative colitis, specifically age or size, 7 to 70 but they really are not robust immuno therapies. And they have a number of safety and tolerability issue, because they are such cut many question, scope, we do really think that.

We have a chance to be a one of the first, effective UC therapy that are – effective overall maintenance therapy, and therefore when we went testing our profile and market research, it does appear to been chosen before biologics. And so it could be again a first-line oral maintenance treatment after a 5 day safe trajectory example.

So, we are also designing our clinical program in well 5 to 8 days failure and to position that potentially against this oral maintenance therapy. So because of that I think we are seeing very good uptick in the markets we have been doing before anti-TMS and before vedolizumab. And actually the other orals that are being tested in development today don’t seem – there is simply some safety concerns around them. So again, our profile is resonating very well with clinicians.

Marko K. Kozul – Leerink Partners, LLC

Appreciate you taking the questions and look forward to you to see updates on the data in mid-year. Thanks a lot.

Faheem Hasnain

Thanks, Marko.

Operator

(Operator Instructions) The next question comes from Liana Moussatos from Wedbush Securities.

Liana Moussatos – Wedbush Securities, Inc.

Thank you for taking my question. Can you give us any kind of operating expense guidance for 2014 and do you plan to start any of these new indications or primary progressive trials by the end of this year?

Graham Cooper

Liana, it’s Graham. So, unfortunately we’re really not in a position to provide operating expense guidance for this year. The reason for that is that we have some very important decision points coming up based on the RMS RADIANCE Phase 2 data in mid part of the year and subsequently the UC data. So, for example, if the data from RADIANCE is positive, we may choose to initiate the second Phase 3 trial and incur startup cost related to that trial later in 2014 and likewise for alternative clients the TOUCHSTONE results were positive. We may start to incur cost there. And then as Sheila and Faheem both mentioned, we have other follow-on opportunities in other areas that we could pursue. So, we’ve chosen not to give specific guidance for 2014 at this point because anything we say is likely to change based on the data and the clinical development plans.

Faheem Hasnain

But to be clear, Liana, the other indications, so if you just think about Crohn’s, primary progress of MS, other spots that we take RPC1063, those are success scenarios and what I mean by that is that obviously first and foremost, we will be using a positive MS study, a relapsing MS study, our Phase 2 as a gate for anything further that we do in MS. And certainly positive UC study would be a gate for anything we consider doing in Crohn’s disease. So, really any of those other indications that we are contemplating is really in anticipation of success scenario where these Phase 2 read out.

Graham Cooper

I think the most important point relative to the cash and the runway is just we are going to have plenty of cash post the data, but it tends to be RADIANCE as well as the TOUCHSTONE data to be able to make your decision later this year.

Liana Moussatos – Wedbush Securities, Inc.

Do you anticipate that the first half spend this year will be significantly higher than the first half of last year or the second half of last year?

Graham Cooper

Yes, I think it will go up. I don’t know about significantly, but it will go up because we’re in the first swing on Phase 3 cost with our MS cost.

Liana Moussatos – Wedbush Securities, Inc.

Okay. Thank you very much.

Faheem Hasnain

Thanks, Liana.

Operator

At this time, I am showing no further questions. I would now like to turn the call back over to Faheem Hasnain.

Faheem Hasnain

Okay. Well, thanks all for joining us on this call. We appreciate your support and we look forward to continuing to keep you updated as our development programs progress. So thanks, and good afternoon, everybody.

Operator: Ladies and gentlemen, that does conclude the conference for today. Again thank you for your participation. You may all disconnect. Have a good day.

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