Cempra's CEO Discusses Q1 2014 Results - Earnings Call Transcript

Apr.29.14 | About: Cempra, Inc. (CEMP)

Cempra, Inc. (NASDAQ:CEMP)

Q1 2014 Earnings Conference Call

April 29, 2014 4:30 PM ET

Executives

Robert E. Flamm – Investor Relations, Russo Partners, LLC

Prabhavathi Fernandes – Founder, President and Chief Executive Officer

Mark W. Hahn – Executive Vice President and Chief Financial Officer

Analysts

Morgan Haller – Robert W. Baird & Co., Inc.

Ying Huang – Barclays Capital, Inc.

Edward H. Nash – Cowen & Co. LLC

Alan Carr – Needham & Company, LLC

Steve Brozak – WBB Securities

Stephen D. Willey – Stephen D. Willey

Operator

Good day, ladies and gentlemen, and welcome to the Cempra First Quarter 2014 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

Now, I would like to turn the call over to Robert Flamm of Russo Partners. Mr. Flamm, you may begin.

Robert E. Flamm

Thank you, Kevin. Good afternoon and welcome to Cempra's first quarter 2014 financial and operating results conference call. Joining me on the call are Dr. Prabha Fernandes, President and Chief Executive Officer and Mark Hahn, the Chief Financial Officer at Cempra.

Before I turn over the call to Dr. Fernandes, I would like to point out that management will be making forward-looking statements during this conference call. Such forward-looking statements, may include statements about the timing of the completion of announcement of results of the solithromycin Phase 3 clinical trials, SOLITAIRE-Oral and SOLITAIRE-IV and community-acquired bacterial pneumonia, the timing of the completion of announcement of results of the Phase 2 clinical trial of Taksta for prosthetic joint infections and or the initiation timing of completion of a Phase 3 trial of Taksta for prosthetic joint infections, the timing of completion and announcement of results of the solithromycin pediatric study and biodefense pathogens, the plans to expand solithromycin’s clinical development beyond anti-bacterial indications and the cost and result of such study, the current plans for commercialization for solithromycin and Taksta, financial guidance and other statements that are not historical facts.

Such statements may include the words, plan, will, expect, believe, may, could, would or similar words. You are cautioned to not place undue reliance on these forward-looking statements, which are only predictions and reflect the Company's beliefs, expectations and assumptions based on currently available information, and speak only as of the time they are made.

Risks and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements, include the cost, timing, regulatory review end results of our studies and clinical trials, our anticipated capital expenditures and our estimates regarding our capital requirements, our need to obtain additional funding and our ability to obtain future funding on acceptable terms, the possible impairment of or inability to obtain intellectual property right and the cost that is obtained in such rights from third party and other risk identified in our SEC reports.

For discussion of these and other factors, please refer to the risk factors described in our filings with the SEC. For forward-looking statements we claim the protection of the Private Securities Litigation Reform Act of 1995.

I will now like to turn the call over to Dr. Fernandes, President and CEO of Cempra.

Prabhavathi Fernandes

Thank you Robert, good afternoon everyone. Welcome to our teleconference presentation on the first quarter 2014 financial results and update on our activities of the Company. I will first provide an update on the status of our SOLITAIRE-Oral Phase 3 trial, review scientific presentations of three upcoming medical conferences in May and summarize events that are currently in the first quarter of 2014 as well as update to on our guidance for our clinical programs.

Mark will provide a financial overview for the quarter. First, we want to update you on the SOLITAIRE-Oral, our oral Phase 3 study of solithromycin and community-acquired bacterial pneumonia or CABP. During our last call in February we described how we were well beyond 50% of our enrollment target, we also revise our guidance on release of top line results for the first quarter of 2015.

Now with the end of the Northern Hemisphere flu season, we remain comfortable with our guidance of enrollment completion in the last quarter of 2014 and release of top line data in the first quarter of 2015.

As of today we are over three quarters enrolled in the SOLITAIRE-Oral study. Remember we had only one half which was done in February that was just a couple of months ago. We continue enrolling in 16 countries globally, but expect to ship through to increasing enrollment in the Southern Hemisphere enrollment is also ongoing now.

We have completed the planned 50% of PORT-II patients and therefore future enrollment in this study will focus on PORT-III and PORT-IV patients only. Importantly, we are very pleased with this study to-date. Then it’s not been an oral cap Phase 3 study done up until now that follows a new FDA guidance. We expect that our study will be a landmark study with data that were demonstrated me for a new macrolide in the treatment of CABP.

We mentioned in the last call that we are focused on producing a high quality clinical study. We thought we would spend a few minutes describing what we mean by that and what we are seeing. And I frequently described surveillance results that pneumococci that primary pathogen in CABP have shown increased resistant to azithromycin.

Now I want to share with you that many of the pneumococcus strains from the sputum of the patients in our study have been shown to give [azithromycin] (ph) where they all remains susceptible to solithromycin. And that is surprising bit of data is that we had a number of S. Aureus isolate from the sputum. All the macrolides are not typically used for S. aureus infections. All of these things are susceptible to solithromycin.

The increase in resistance over the macrolides is clear and a new well tolerated alternative treatment is needed. Solithromycin is active against macrolide registrant strains and unlike all the macrolides including azithromycin, Solithromycin has shown no QT effects

The second global Phase 3 SOLITAIRE-IV continues to enter new countries and initiate new sites to enroll patients. In order to give you guidance from the timing of the completion of this trial, we need a full North American flu season to provide a reasonable basis for a full count.

We expect to be in a position to do so, by the end of April 10, 2015. Now let’s update you on some of the other solithromycin indications that highlighted broad use potential. At our end of Phase 2 meeting last year, we had discussed the Phase 3 study design uncomplicated gonorrhea infections. We’ve had discussions with the FDA that leads us to believe that a single Phase 3 study will be considered sufficient when submitted with the CABP Phase 3 NDA.

We have received QIDP of Qualified Infectious Disease product designation from the SBA, urethritis gonorrhea in addition to this two QIDPs, we have a CABP of solithromycin. As you now know resistance to gonorrhea is a growing problem. The one oral antibiotic that were used to gonorrhea, Suprax or cefixime is no longer recommended because of resistance.

This leaves only intramuscular ceftriaxone as a recommended treatment option and new oral options are needed. Treating resistant to ceftriaxone have also been isolated suggesting that treatment in the future could become even more challenging and leading no treatment options. Remember, this is the second most common reportable communicable disease. The CDC has classified the treatment of gonorrhea as an emergency need.

This study is expected to enroll primarily in Australia, but the costs are expected to be largely absorbed by their public health system. Cempra will have solithromycin drug product cost as well as data handling and monitoring cost required for a Phase 3 study. We are also considering a single phase in the U.S. as well. We expect to enroll a total of approximately 350 patients including all types.

As single 1,000 milligram over dose of solithromycin will be tested at monotherapy to treat gonorrhea and Chlamydia infections compared to intramuscular ceftriaxone to treat gonorrhea plus oral azithromycin to cover Chlamydia. Again this is oral and monotherapy with solithromycin. This is not a seasonal disease and we expect enrollment to occur at a steady pace following initiation of the trial.

We’ll let you know when the first patient has been enrolled. We plan to submit the results of this study at the second indication with CABP as the primary indication for our NDA. The CABP pediatric study plan or PSP, have been accepted by the FDA and the pediatric investigative plan or PIP had also been submitted and reviewed by the EMA.

Based on this study plan adolescent children are being build for the oral capsule. A pediatric suspension has been made and it’s been moved into manufacturing for use in clinical testing. This work is funded by BARDA it is the first new antibiotic that has been developed as a suspension in 25 years. The suspension will be tested oral by availability in adults which is expected to start in Q4 2014 and will be funded by BARDA, prior to using it in our Phase I study for younger children.

In February, we announced the dosing of the first patient in our solithromycin pediatric program. The broad new potential for solithromycin include this potential for use to treat infections in pregnancy. Such infections are known to result in preterm birth that is a large cost of the healthcare system according to the (indiscernible) almost $19 billion in overall costs are attributed to preterm birth in the United States alone.

As we reported late last year, solithromycin penetrated down into the amniotic fluid and placenta in sheep, which is a model for human pregnancy. More recently additional work has shown similar penetration into human placenta at vivo. Cempra has completed developmental toxicology studies under the BARDA contract. We believe that solithromycin safety profile in segment one, two and three developmental toxicology should allow dosing during pregnancy.

We look forward to spending the testing of solithromycin in pregnant women at a future date. Professor Barnes and his team at Imperial College of London has published on a strong and selected anti-inflammatory properties of solithromycin. Teams are working with him to conduct a small study of about 20 COPD patients has conjunctive, obstructive pulmonary disease. We move bacterial infection to understand the effect of solithromycin in this indication.

This study is also expected to start in Q4 2014, our partnership with Toyama and FUJIFILM is proceeding well. Toyama conducted the primary work required to make the pediatric suspension and the expertise was very helpful. Additionally, they have progressed in their trials, solithromycin is now a multi-dose Phase I study in Japan.

Inflammation is central to many diseases. We are investigating the use of solithromycin and other diseases, the inflammation is known to play a central role. We are presenting new data from these studies at two upcoming medical conferences in May along with infections in these studies to be presented at (ECCMID), the European Infectious Diseases Conference.

Some of these data highlight the potential of solithromycin’s anti-inflammatory properties in treating non-antibacterial indication. At 9:15 AM Central Time on May 6th at the Digestive Disease Week in Chicago, we will be presenting our late Breaking oral presentation on the anti-NASH effects of solithromycin in the NASH animal model.

The specifics of this presentation remain under embargo until the time of the presentation, but we hope to see many of you at that presentation. Non-Alcoholic Steatohepatitis or NASH have received a lot of attention lately and for good reason NASH effect between 2% and 5% of the United States population and there are no approved therapeutics for this condition.

In the absence of prudent treatments, physicians often recommend the combination of diet and exercise. It often starts as non-alcoholic fatty liver disease or NAFLD, which affects one quarter of the U.S. population, but often progresses to the more severe NASH in which inflammation or cellular ballooning, or apoptosis, occurs. NASH can lead to liver fibrosis, cirrhosis and primary liver cancer.

Several candidates are in development by others or NASH but we believe that multiple approaches need to be available per patient. We are currently evaluating next step importantly because of our significant and growing safety and pharmacokinetic database on solithromycin. We believe we could move right into our Phase II proof-of-concept trial if and when we decide to move forward with this indication. At ECCMID, which will be on May 10 to 13 in Barcelona, we will be presenting eight studies on solithromycin that covers topic such as additional non-CABP anti infective indications such as otitis media, safety, surveillance study and the pharmacoeconomics analysis of current therapies in CABP. We hope to see many of you there as well.

At American Thoracic Society conference or ATS on May 16 to 21 in San Diego we will be presenting in vivo data on another anti-inflammatory non-antibacterial indication for solithromycin. Chemotherapy-induced lung inflammation and fibrosis.

This is the problem for many chemotherapeutic regimen but only current treatments are either corticosteroids or withdrawal of the chemotherapy agent causing the problem. Address such as solithromycin that could reviews or prevent lung inflammation and the resulting fibrosis would be a potentially attracted options for patients and their physicians.

As with NASH, we believe it could move right into a Phase 2 proof-of-concept trial if we decide to move forward with this indication. Now, a brief update on the event at the company during the first quarter of 2014.

In February, we announced the result of the solithromycin therapeutic study which demonstrated no QT effects, solithromycin maybe the first macrolide with no QT effects. Even azithromycin which was until recently thought to be a safe antibiotic were shown in a large retrospect cohort study from the National VA electronics Host record of 14 million unique person who received care between September 1999 and April 2012 to significantly increase debt of 48% higher and show 77% higher risk of cardiac arrhythmia in the first five days of treatment when compared to amoxicillin.

Those who received levofloxacin had 149% and 143% higher risk of death and cardiac arrhythmia than (indiscernible) of patients in the first five days with higher rates as the duration of treatment increase. These data are another edition to our 50 database for solithromycin and improved the favorable QT safety and excellent tolerability demonstrated in the patient population with hepatic insufficiency.

In December, we discussed the state of enrollment in our Phase 2 PJI of the study joint infection study. We are encouraged by receiving an orphan drug designation for fusidic acid therefor the treatment of PJI.

Many of you are aware of impediments enrollment while following strict requirements to have culture, proven infection and also no other concomitant antibiotic treatment for these very complicated patients including an antibiotic impregnated prosthesis which is commonly used.

We also said in December that we have learned a lot from our Phase 2 study of how to use fusidic acid. Our Phase 2 protocol is a two stage revision study in which we use fusidic acid with rifampin has been recommended overseas. Rifampin is known to have low tolerability and also effect yet, we have to use it the fusidic acid as this was the norm ex-USA and with as published from Australia (indiscernible).

However the effect of Rifampin on fusidic acid is not known and not published anywhere, so we measured the blood levels of rifampin and fusidic acid in our patients in our Phase 2 studies. One of our unexpected finding was that when rifampin and fusidic acid are used together to treat patients, rifampin increase the metabolism of fusidic acid significantly in all patients resulting in ineffective levels of fusidic acid levels in some of our patients. Also this results in erythromycin essentially working as a single growth to treat staphylococcal infection and this can result in erythromycin resistant. Erythromycin is not used as a single drug because of resistance development.

Although erythromycin is known to have significant drug interactions both are in vito parasite data and empirical clinical data from around the world argue that this will be an effective combination. Therefore, the magnitude of receptor erythromycin on lowering fusidic acid blood levels was a very surprising finding considering the four decades of fusidic acid used overseas in combination of erythromycin. We plan to publish these results, knowing what we know about the effect of erythromycin on fusidic acid the important enrollment in this trial.

And in addition to the PJI Phase II study, we also have a compassionate fused program, the patients who have failed all other available medicines for bone and joint infections could be treated with fusidic acid [osteomyelitis] (ph) therapy. This study remains open.

Now in the proposed Phase III study, we cannot use fusidic acid erythromycin as has been used obviously. There is limited experience in fusidic acid in monotherapy for the treatment of bone and joint infection except in the few compassionate used cases that many of you have heard me represent. We do have experience using fusidic acid in monotherapy in our ABSSSI study or acute factor of skin and soft structure infection. Phase II study where we show comparable activity to enable it a SaaS drug. However, a bone and joint infection is more complicated than a skin infection.

In discussion with the FDA, we now know that the FDA would require a comparative study even under the orphan umbrella, if we proceed to test in a PJI 2 phase envision protocol. As you have already noted in our Phase II study enrollment is difficult and slow. Therefore, we are working with a regulatory and clinical staff the finest protocols that our study might be feasible. Again, there is no guidance for bone and joint infections and we’re hoping to work with the SBO defining how to bring this useful antibiotic to its NDA. We will provide more information after we have a chance to discuss this approach with the FDA.

We now have two late stage products and multiple indications for solithromycin in active development. Although this keeps us busy, we look to increase our value and expand our product portfolio. We look outside as well as that our own expertise that macrolide chemistry. Macrolide is a interesting molecule because that the potential utility outside of their antibacterial activity. We’ve already explained how the anti-inflammatory activity may have potentials to still treating at NASH.

An early area of interest for us is macrolides gastric intersectional motility effect to treat motility disorders. Currently intravenous azithromycin is used clinically for gastric and pain. Intravenous azithromycin is not optimal because it is painful and also not possible for daily administration. Azithromycin has it’s own safety rec. This is viewed for gastrointestinal. Gastrointestinal motility could grow in area of interest with the increase surveillance of diabetes as well in an ageing population.

Motilin is a natural sector that buying some motilin receptor in the stomach valve in using the stomach to contract an empty content. Natural motilin is released every 90 minutes and initiate the contractions at the stomach which move down the GI track, maintaining it’s integrity. It’s estimated that approximately 6 million Americans suffered from gastroparesis and a few treatment options and tips. Cempra has initiated a narrowing focused program on a non-antibiotic macrolide candidate that appears to have potent and contraction ability to a non-clinical model system.

We are working to confirm this activity and also develop a small piece of molecules from which to pick a lead candidate to move into development. It should be noted that this is a validated target and the program used erythromycin as a starting molecule. A product already validated a new clinically including gastroparesis.

Cempra hopes to enter the therapeutic area as this program matures, we’ll keep you informed as a status of this program as it progresses. In January, we announced the appointment of David Moore as Chief Commercial Officer. David has significant experience bringing new drugs for a wide variety of indications to the market as well as on implementing reimbursement strategies. David has already conducting the broad strategic work towards better understanding and identifying positioning an appropriate pricing strategy for solithromycin. He is engaging key opinion leaders and peers to identify the urgent need and the unique pace in therapy for solithromycin.

Finally, we will be presenting at three upcoming Investor conferences. We will be presenting at the Bank of America 2014 Health Care Conference in Las Vegas on May 15, The UBS Global Healthcare Conference on May 21 and the Jefferies 2014 Global Healthcare Conference on June 3rd both in New York. This is the current status of our program.

Now we would like to turn the call over to Mark Hahn, our CFO, to review the financials. Mark?

Mark W. Hahn

Thank you, Prabha. The busy phase of our clinical development programs has reflected in our income statement with our net loss increasing by 65% to $17 million for the first quarter as compared to last year’s first quarter. As you know, our net loss was driven largely by our R&D spend. In the quarter though, we did receive $3 million of revenue for work performed under our BARDA contract, which help to offset some of our expenses.

Our activity under the BARDA program has continued to increase rising from less than $1 million in Q2 of last year to $3 million this quarter. We expect our BARDA activity to continue at a run rate of $2 billion and $2.5 billion per quarter for the next few quarters. As I discussed on the last earnings call, we generally look at our R&D spending in four broad categories. Solitaire-Oral, Solitaire-IV, Taksta Phase 2 for PJI and BARDA. Moving forward we expect to add Solitaire GC to the list.

With respect to the cap program Solitaire-Oral and Solitaire-IV are up in running as Prabha discussed. Q1 saw significant activity in both programs and we expect to have BARDA relative to cap to remain high until we finish enrollment of the oral program, which is expected by the end of this year and then decreased somewhat as we are just the IV program.

We’ll update you on our future call regarding the plans and cost of moving into a pivotal program for Taksta. Prabha also discussed the plan Phase III for gonorrhea. That work has expected to largely be funded by the public health system in Australia, we will incur some costs the bulk of which will hit once we commence the Phase III trial. Regarding our cash runway, we expect to have existing cash and equivalents including interest there on and timely receipts under the BARDA contract and expected milestones payments from Toyama, will enable us to fund our operating expenses and capital expense requirement through 2015, which includes the completion of enrollment in our two Phase III clinical trials and completion of the two ancillary clinical studies currently expected to be necessary to support the planned NDA for solithromycin from the treatment of cap. This projection does not include funds from future financing or partnerships beyond Toyama and BARDA relationships. Prabha.

Prabhavathi Fernandes

Thank you, Mark. Operator we are now ready for question.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from Brian Skorney of William Baird. Your line is now open.

Morgan Haller – Robert W. Baird & Co., Inc.

Hi, good afternoon. This is Morgan on for Brian this afternoon. I just had a quick question regarding TAKSTA. can you just provide a little more color around what options you are considering if the FDA discussions don’t give you feasible registration path? Thanks.

Prabhavathi Fernandes

Thank you. So we are looking at either going back to debride and treat. I think we have described that in our F1 originally. And in that case, what you would have to do is to treat one arm that would be a comparative trial since the FDA wants a comparative trial, you would have to treat one arm with the standard of care, which would be Vancomycin plus rifampin and then rifampin plus another oral drug with levofloxacin as they go home.

And the second arm would be fusidic acid or TAKSTA plus Vancomycin for a week and then fusidic acid alone. This is what we have used is some our compassionate use cases and it had worked very well. the FDA accept that would be one way to go and there are sufficient aged patients who do not want have another surgery who could enroll in that study and of course there is a very big need, because there is a quality of life part of that study.

We could also if that is too difficult to do and if you require too larger number the others way would be to go with compassionate type use, so that would be salvage therapy alone. There would be where there is no other way to treat the patient. We do have one patient just like in some of slides as have you’ve heard me present before. There is a patient in South Carolina today who had sales for almost two years on everything and we gave him compassionate use of TAKSTA and in two weeks he is all better and in fact he is 80 years old and he is now looking to go get a drivers license.

So this is the kind of nice story which makes us keep on pushing forward and to try to get this drug approved.

Operator

Our next question comes from Hyun Young [ph] of Jefferies. Your line is open.

Unidentified Analyst

Good afternoon. Thanks for taking my question. This is John in for Hyun. So for urethritis are you now waiting for federal funding and then for 350 patients targeted enrollment how long would it take to data read out?

Prabhavathi Fernandes

Yes. So no we are not waiting for federal funding, although there is some available, but we cannot wait, sometimes the government is very slow as you probably, but we have gotten support from the Australian Public Health as I did and Mark did mentioned. So the cost is same like the cost to drug, our monitoring cost to data collection, so it’s not as big as real phase III study normally would cost.

We don’t have site cost and further costs of paying various patients and so on. So it’s much cheaper study, because the Australian Public Health is taking care of that cost and so running 350 patients some of that we hope to do with the U.S., we have not yet decided on that but the Australian study does charge and we expect that study, we are not rushing forward with that study, it could take as long as let’s say 12 to 18 months, because we are not going to submit that to the NDA until the CABP study is done. I think we have mentioned this to some people that that’s because you get patent term extension to the primary indication which is CABP.

Unidentified Analyst

That’s helpful and then on TASKSTA a quick follow-up. How many patients are feasible on a Phase III if it’s not controlled study versus a controlled study?

Prabhavathi Fernandes

What we could do depends on whether it’s the debride and treat or salvage. So if it’s a salvage, I suspect we can do about 30 patients or so and if it’s debride and treat maybe about 50 or 60. We don’t know maybe we’re doing – they are meeting with KOLs as I mentioned and once we meet with our KOLs we will ask them how many patients of that kind do they have in each of those sites and then we will let you know.

Unidentified Analyst

Thank you.

Operator

Thank you. And next question comes from Ying Huang of Barclay. Your line is now open.

Ying Huang – Barclays Capital, Inc.

Hi, it’s actually Catherine for Ying. Thanks for my question. One, are you guys don’t search for partners for Solithromycin and if so how are those discussions progressing and what kind of economic are you looking for. And then you may have – I think you talked to that or you cant talk too much about it, but can you give us any commentary around the Solithromycin activity for NASH and kind of what we should expect or what kind of data we could expect to see knowing that is its animal data.

Prabhavathi Fernandes

Okay, so with – for the partnerships as Mark mentioned we have financed to take or finish all the enrollment and the ancillary studies we need for the Solithromycin NDA, as you can image our biggest value will be after we have the NDA submitted. So we’re not actively looking for partners for selling or licensing out the drug completely. However, we are opened to getting partners for commercialization, as you can imagine if this product is a biggest – we believe it will be then you’re going to need a retail partner somebody in the community to sell it and for that as you know we hired David Moore, he has the good lead into other commercial department within big pharmas and we are talking.

Ying Huang – Barclays Capital, Inc.

Okay, great and then just on the NASH any commentary you guys have, knowing that you guys are restricted.

Prabhavathi Fernandes

Yes, so in NASH as I mentioned there are some very key things which happened so the liver goes through inflammation – first it goes through steatosis or fat accumulation then to inflammation and then it will clue what's called the ballooning degeneration and the fibrosis and then hepatocellular carcinoma. In this animal model you see all of these happen just like it happens in some unfortunate patient okay. And many unfortunate patients. So what we have done is treated these earliest things and what we represent is the fact of Solithromycin in blocking this development of this hepatocellular carcinoma or ballooning degeneration of vehicles, so you will see that data next week and unfortunately I cannot reveal it because it is a late breaker and it is embargoed.

Ying Huang – Barclays Capital, Inc.

Yes. Thank you very much.

Operator

Our next question comes from Edward H. Nash of Cowen & Co. LLC. Your line is now open.

Edward H. Nash – Cowen & Co. LLC

Hi, great thanks for taking my call. Just wanted to find out Prabha, based on your timeline that you are giving now for the enrollment of the oral and IV trails for Solithromycin, is that’s taking into account you are comfortable with the requirement now with 75% of the port 34, you still feel with that constraint you would still be able to get enrollment top line data.

Prabhavathi Fernandes

Yes.

Edward H. Nash – Cowen & Co. LLC

Okay.

Prabhavathi Fernandes

No problem at all, because firstly we have always known that. So the current guideline says 25% of PORT-II, but the database is about 630. You must remember Ed that we are doing about 850 patients. So 50% of PORT-IIs in the 800 makes about 25% if you take only 630 patients. So we have successfully finished the 50% of the PORT-IIs in the old study and PORT-IIIs are enrolling. I mean the weather itself is pretty miserable and we think spring is here, but we actively enrolled three PORT-III patients today. So they’re enrolling (indiscernible) right now.

Edward H. Nash – Cowen & Co. LLC

Great. Okay. So those will be those PORT-III and PORT-IV patients. You will have about the same number in IV trail – oral/IV trail as you have in the oral trail?

Prabhavathi Fernandes

That is correct and we had told the FDA that we will enroll over 800 patients in the IV study. The new cap guidance says that you can enroll fewer patients, 600 and some patients, but we are still keeping with that 800 because I think it will provide a good safety database anyway and if we can enroll we will do that.

Edward H. Nash – Cowen & Co. LLC

Okay, great. And then just my last question would be just with regard to the NASH data you should be presenting. So you said that you have the ability – since you go out into a Phase 2 proof of concept study. Any idea on timing of when you would do that?

Prabhavathi Fernandes

Yes, so the reason I said we can go in is, firstly, we have a lot of safety. I think you know that we have pushed the safety of solithromycin to the extreme. We have three-month toxicology in the rat and in the monkey. So with that, we can built human with three months because that’s the length you will see because most humans unlike mice rests for a weeks. They have had NASH prepared science. So you want to tap into a longer period of time. So we can treat humans for three months in this study. Now what we are doing is we are taking to herpetologists and we will design a study and then of course we have to decide how large is this study, can we find a partner to fund it, can we talk to the government. So we haven’t just thought about the exact way how we are going to comment because we don’t know the size of the study yet and we’re just talking about it.

Edward H. Nash – Cowen & Co. LLC

Great. Thank you.

Prabhavathi Fernandes

You’re welcome

Operator

Next question from Alan Carr of Needham & Company. Your line is now open.

Alan Carr – Needham & Company, LLC

…taking my questions.

Prabhavathi Fernandes

Hi, Alan

Alan Carr – Needham & Company, LLC

Wondering just maybe can you comment on what are the alternative indications that might be appropriate for PJI? I mean how committed are you to that one, are there other sort of long-term treatment indication that you might explore there if you continue to run in the challenges there? And then also with David Moore on board, can you give us update on how things are coming from the commercial perspective in your analysis of the opportunity there? Thanks.

Prabhavathi Fernandes

Yes. So instead of PJI, if you think about bone and joint infection, which is really what textbooks – this fusidic acid was used, you can use foreign bodies which are put into various joints including (indiscernible) and so you can bring that out into bone and joint infections than just prosthetic joint infection and accumulated. So you could input some of those. So these are the kind of the discussions they are having with our care outlets, how many can include, what can include. So then you will also have to have, if it’s a competitive trail, which we think it will have to be, then you would have to also put them into both of those categories. So, yes, some of them expand into other things within the bone and joint infection area and we’ll see what our care tell us.

On the question of the commercialization, David has been working very hard meeting with the KOLs have been traveling all over the place, having these group meetings and he’s also got companies doing this market research and we expect by the end of May, perhaps to be able to mix with people like you and give you an idea of what our market research would yield.

Alan Carr – Needham & Company, LLC

Okay great. Thanks very much.

Prabhavathi Fernandes

You’re welcome.

Operator

Our next question comes from Steve G. Brozak of WBB Securities.

Steve Brozak – WBB Securities

Hi good afternoon. Hey obviously on the majority of questions have been asked. So I’m going to go in dig into something here that I’ve been looking at and I’m sure you’d love to explain. And that is this anti-inflammatory capacity that’s all we have because positions or clinicians they go out there in the well typically treated bacterial infection but there seems to be something else here an it’s kind of intuitive and I’d like you to give as much detail as you can give because obviously this anti-inflammatory component is pretty significant. Can you tell us why this is different in terms of an antibiotic in also treating the anti-inflammatory component. And I’ve got follow-up after that?

Prabhavathi Fernandes

Okay, I can tell you because there is some aspects of it which is already been published by Professor Barnes and his team from Imperial College London. So what they have published is including and what’s called the smoking mask models. Okay so in this smoking mask models you get smoke and then you treat with sort of the mice and then you can then harvest the cells in the lung and then you can look to see what kind of cells and what are the kind of cytokines which came out there. You could also do this in detail which they have done with COPD cells and they have published in this in two separate journals in there on our website.

So what happens here indeed, these animals and outgoing vito is that the cells now are much more sensitive to dexamethasone. So what happens is in anybody who’s got an inflammation can be treated with dexamethasone, over a period of time he gets resistant to dexamethasone. These cells are now more sensitive to dexamethasone. So you can go back with a daily dose of the dexamethasone and don’t have to give very high doses as you know dexamethasone has a lot of side-effects. So how does it work, the mechanism is known is actually solithromycin will enhance the activity of HDAC2 promoter, which then upregulates cytokines by destroying HDAC2. so increasing HDAC2, which is downregulated in many of these inflammation diseases. So when you downregulate cytokines, obviously there is less damage and they have also published that neutrophil intersection into the lungs which actually results in a lot of cytokines release is decreased.

So we don’t know I want people to say this is one excuse, that we do some results as to what happens in NASH as well as in the lung fibrosis which we will be talking about at the end of the month. That you can imagine that there is commonality of biology and we’re very excited by the results.

Steve Brozak – WBB Securities

Which actually then leads me into the last question and I will hop back into the queue. Given the fact that it is powerful as that it is, that how you’ve had a lot of patients now. What about the side effect profile or I should say the lack that, what are you seeing there because it’s one of the things, this does seem to be that powerful what are you seeing and why is there what’s your explanation on the fact that you are seeing such a clean profile and what kind of historical precedent you have with that. And I’ll hop back in. Thank you.

Prabhavathi Fernandes

So we can start with saying that mucolites generally are safe, azithromycins have been used since 1957. Azithromycin was known as a very safe drug before – since the activity has become known but it has been used for even last year 52 million prescriptions have written and of course a lot of people didn’t just die.

So my comments of Taksta is always being safe. However they have also being used as anti-inflammatory, so when we tested our compounds, we just found out during our studies about four years ago, that we had much, much foot in anti-inflammatory properties than the older macrolides. So we there also very potent in antibacterial, the potency even translated even further as anti-inflammatory.

Now, our molecule is quite different in structures, we’ve got the macro technique ring, but it also has this sight change on the 11%, 12% carbon net area, and it also has a two flooring and no (indiscernible). And the two flooring I do believe and the chemist believe actually a mix that macro technique ring occurs a little bit differently. Then in the older macrolide, it’s probably the shape of that macro technique ring which binds to one of this ligand pockets much better than the older macrolide.

Steve Brozak – WBB Securities

Okay thank you.

Prabhavathi Fernandes

All right, thank you.

Operator

Thank you. (Operator Instructions) Our next question comes from Stephen Willey, Stifel. Your line is now open.

Stephen D. Willey – Stephen D. Willey

Yes, hi, good afternoon.

Prabhavathi Fernandes

Hi Steve.

Stephen D. Willey – Stephen D. Willey

With respect to the – hi, Prabha. With respect to the Phase 3, GC trial when would you expect had cured the measure, and then I know, reinfection can be a problem with these patients. Just kind of wondering what kind of question you would build into powering symptoms?

Prabhavathi Fernandes

Yes, that’s a good question, and I see actually I put on a raw guidance could you see right on time for us, but they had already discussed this with us. So with gonorrhea you have to be clean for seven days, so these patients are staying for seven days and you culture all types.

Now remember you had a comparator in Phase 3, we didn’t have in the Phase 2, so in the Phase 3, you expect the same number at least of failure of people who cheat and so you would see them in both arms.

Now for Chlamydia you have to follow for 14 days, so you will be doing the net test later for Chlamydia. So you’d be looking for that 14 days, look for 7 days and if they are negative you don’t have to bring them back on the 14th day, and if you they are positive, we bring them back on the 14th or 15th because what that happens is the bug will lie but the DNA can hangout. So you have to check if the DNA is on, and 14 days later.

But that we are also screening for mycoplasma genitalium, it is not the primary or secondary point it’s just a scientific interest. We know it’s a major pathogen now and that are big problem then genitalium, and we’d also be doing a net test for that.

Stephen D. Willey – Stephen D. Willey

Okay. And then just, quick on Taksta, I may have missed it, but can you just drive a little of the whose patient are around the mechanisms by which what happens to bleeding plasma levels of – is it just competing for the same (indiscernible) proteins in this serum?

Prabhavathi Fernandes

No, no so rifampin and this is kind of once you know the results, you immediately, oh my God, this is obvious, it was an obvious for 40 years right, but yet to think it’s obvious when some of data, and the reason is rifampin is very well known to increase (indiscernible) very well known and we also know that fusidic acid is metabolized versus – so we had studied in these where battle sites thinking this was like obvious.

We studies that in vitro have parahuman hepatocyte, we simply expect, and it isn’t one thing in vitro, that we’d well making on, and we went ahead. And of course with 40 years worth of data, it’s hard to question that. So we did it in people, obviously rifampin is increasing to 54, which is actually the metabolizing enzyme for fusidic acid.

Stephen D. Willey – Stephen D. Willey

Okay. Nice color.

Prabhavathi Fernandes

You are welcome.

Operator

I’m not showing any further questions at this time. I’d like to turn the call back to management.

Prabhavathi Fernandes

So thank you all for the questions and for listening in, I know the presentation was long. We look forward to updating you on upcoming events and thanks have a great evening.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program you now disconnect, everyone have a great day.

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