GW Pharmaceuticals' (GWPRF) CEO Justin Gover on Q2 2014 Results - Earnings Call Transcript

May. 7.14 | About: GW Pharmaceuticals (GWPRF)

GW Pharmaceuticals Plc (OTCPK:GWPRF) Q2 2014 Earnings Conference Call May 7, 2014 8:00 AM ET

Executives

Steve Schultz - Vice President of Investor Relations

Justin Gover - Chief Executive Officer

Stephen Wright - Director of Research & Development

Adam George - Chief Financial Officer

Analysts

Ritu Baral - Canaccord Genuity

Tazeen Ahmad - Bank of America

Phil Nadeau - Cowen & Company

Joseph Schwartz - Leerink Partners

Lala Gregorek - Edison Investment

Kristina Cibor - Piper Jaffray

Operator

Greetings and welcome to the GW Pharmaceuticals Second Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mr. Steve Schultz, Vice President of Investor Relations. Thank you, Mr. Schultz. You may begin.

Steve Schultz

Welcome and thank you for joining us on the call today. Again, my name is Steve Schultz and I'm the Vice President of Investor Relations for GW based in the United States. Here with me today are Justin Gover, GW's Chief Executive Officer; Chris Tovey, our Chief Operating Officer; Dr. Stephen Wright, our Director of Research & Development; and Adam George, our Chief Financial Officer.

We hope you've had a chance to review our regulatory filings from earlier today. These documents provide additional details on the company's second quarter financial and operating results.

As a reminder, during today's call, we will be making certain forward-looking statements. These statements reflect GW's current expectations regarding future events, including, but not limited to, statements regarding financial performance, clinical and regulatory activities, including the regulatory clearance of our products, timing of product launches and statements related to market acceptance and commercial potential.

Forward-looking statements involve risks and uncertainties, and actual events could differ materially from those projected herein. A list and description of risks, uncertainties and other risks associated with an investment in GW can be found in GW's filings with the U.S. Securities and Exchange Commission. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements which speak only as of today's date, May 7, 2014.

Finally, an archive of today's call will be posted to the GW website in the Investor Relations section.

I'll now turn the call over to Justin Gover, GW's Chief Executive Officer.

Justin Gover

Thank you, Steve, and welcome to all those who are able to join us on the call today. On today's call, I will briefly review our recent progress. Dr. Stephen Wright will provide a more detailed update on our epilepsy program. And Adam George will provide an overview of our financial results for the quarter. At the conclusion of our prepared remarks, we will open the line for questions.

This past quarter continued to be a very active one GW, and I am pleased to say one in which we advanced both the Epidiolex and Sativex through a number of important clinical and regulatory milestones. Just this morning, we announced that the FDA has accepted the Epidiolex IND for Dravet syndrome. Following a successful pre-IND meeting earlier in the year, the IND is now open and we're on track for Phase II/III trials commence in the second half of 2014. As a reminder, Epidiolex was granted orphan drug designation by the FDA last November for Dravet syndrome.

In addition to Dravet syndrome, we're also advancing plans to develop Epidiolex in the treatment of Lennox-Gastaut syndrome. In the last quarter, GW was granted orphan drug designation by the FDA to treat this condition. And we now plan to hold a pre-IND discussions with the FDA in order to confirm the required development program.

In parallel with the formal development activities, GW continues to receive a substantial amount of interest from physicians looking to open expanded access INDs with the FDA in order to commence treatment with Epidiolex. In the last few months, the FDA has authorized significant expansion of both the number of children and the number of clinical sites for treatment with Epidiolex under these expanded access INDs. Stephen will provide more detail on this in a moment.

In addition to this interest from physicians, GW has received numerous inquiries from various US state legislators facing difficult decisions regarding the accessibility of cannabis-based products for epileptic children. Two US state governments, Minnesota and Georgia, publicly expressed interest in collaborating with GW on separate state-based clinical trials in epilepsy. These discussions are still in the early stages, however it is encouraging that legislators are taking steps to seek to conduct appropriate scientific research under FDA authorization with pharmaceutical CBD.

Finally, with respect to epilepsy, we yesterday announced the appointment of Dr. Ken Sommerville as Vice President, Clinical Science based in the United States. Dr. Sommerville joins GW with a significant record of achievement including over 20 years of experience in the pharmaceutical industry with particular expertise in epilepsy pain and other areas of neurology. As such, we expect Dr. Sommerville to play an important role in our US clinical and regulatory activities, particularly those related to epilepsy.

Turning now to Sativex, last month Sativex received fast track designation by the FDA in the treatment of cancer pain. This designation represents important recognition by the FDA of the potential for Sativex to address significant unmet needs in patients with advanced cancer to whom opioids have failed to provide adequate pain relief. The Phase III trials of Sativex in this indication are nearing completion and we remain on track to report topline Phase III data toward the end of this year.

Outside the US, Sativex is now approved in 25 countries and is currently available on prescription in 12. In-market sales continue to grow with volumes sold by GW's commercial partners in this quarter increasing by 43% over the prior year. Underlying these achievements is the financial support we received from investors in our successful $100 million follow-on offering in January. Our cash on hand at the end of March was over $159 million, which includes these proceeds, allowing GW to invest with confidence in order to advance our epilepsy program as rapidly as possible. We express our thanks to those investors who participated in the offering and appreciate their support.

Let me now turn the call over to Dr. Stephen Wright for more detail on our epilepsy clinical program. Stephen?

Stephen Wright

Thank you, Justin. My remarks on today's call will focus primarily on the epilepsy program and then briefly touch on other progress in our pipeline. As a reminder and by the way of background, GW is developing Epidiolex, a liquid formulation of highly purified CBD extract as a treatment for severe drug resistant chartered epilepsy. Our initial focus is on conducting formal development programs for Epidiolex in the treatment of both Dravet syndrome and Lennox-Gastaut syndrome. And FDA has gone to the orphan designation for Epidiolex in each of these conditions.

Our Epidiolex activities fall into two distinct areas, first the series of FDA-authorized physician-sponsored INDs under which Epidiolex is being administered to children down to the age of 12 months with a range of treatment-resistant epilepsy; and second, formal GW-sponsored clinical development programs in Dravet and Lennox-Gastaut syndromes.

Looking first at the physician-led INDs, since January, the number of children authorized by FDA for treatment with Epidiolex has increased from 125 to approximately 300 children. The number of US hospital sites at which these INDs are approved has increased from five to 12. As part of this expansion, the New York University Langone Medical Center has expanded its program from 25 to 60 children.

The timing of commencement of treatment at these FDA-authorized IND sites are dependent upon the receipt of controlled drug licenses from the US DEA, a process which may take several months. To date, three hospital sites have cleared all necessary DEA licensing steps and have started enrolling patients. At this time, there are in total approximately 60 children that have commenced Epidiolex treatment. Importantly, Epidiolex has been well tolerated and so far as we are aware only a single child has withdrawn from treatment.

Under these expanded access INDs, physicians are collecting using a standardized case record form regular treatment data, including seizure frequency, Epidiolex dosing, concomitant anti-epileptic medication, adverse events and/or the clinical measures. We expect patient data from an initial cohort of these IND patients from two IND sites to be made available through an initial disclosure around the middle of this year. It is expected that these data will include information on patients with three months of continuous treatment.

The children included in these INDs (inaudible) no range of drug-resistant epilepsy syndromes not just from Dravet or Lennox-Gastaut. This is important for two reasons. Firstly, it allows us to gain preliminary data on response rates in a variety of potential target epilepsy syndromes. Secondly, it ensures that recruitment in our pivotal clinical studies should not be compromised.

Turning now to the GW-sponsored Epidiolex development program, we held a very constructive pre-IND meeting with the FDA earlier this year. FDA input has not led to any material changes in the proposed development program, as we outlined to investors at the time of our January follow-on offering. As Justin mentioned earlier, we have announced today that the Dravet syndrome IND is important for two-part Phase II/III trial. Part one comprises a dose finding pharmacokinetic and safety evaluation in a total of 30 children over a three-week treatment period. Part two is a randomized placebo-controlled safety and efficacy evaluation of Epidiolex over three months treatment period in what we expect to be a total of approximately 80 patients. GW also anticipates commencing an additional Phase III trial in Dravet syndrome in early 2015 in parallel with part two of the first Phase II/III trial.

In addition to Dravet syndrome, GW is also planning to submit an IND for Epidiolex in the treatment of Lennox-Gastaut syndrome. Having now received orphan designation, we expect to hold a pre-IND meeting with the FDA for Epidiolex in this indication around the middle of this year, with the aim being to conduct two Phase III trials in Lennox-Gastaut syndrome during 2015 alongside our Dravet Phase III trials. All children included in the GW-sponsored placebo-controlled trials will also be eligible to enter a long-term open-label study in which more efficacy and long-term safety data will be collected.

I'm often asked about the expected placebo effect in these trials. While existing clinical data would suggest the placebo effect in pediatric epilepsy studies is in the single-digit to mid-teens percentage range, we've taken to position that in light of very encouraging feasibility for recruitment. It's prudent to take a conservative view to sample size in our studies. Hence we plan for 80 patients in part two of the first Dravet trial and we expect similar sample sizes in our other studies. We believe that this approach is appropriate to maximize the probability of success while not materially impacting timelines.

In parallel with the Epidiolex program, GW has a second product candidate in the field of epilepsy, GWP42006, in which the primary component is the cannabinoid CBDV or cannabidivarin. GW completed a Phase I safety trial for GWP42006, and the results indicated that it was tolerated even at the highest tested dose. We expect to hold a pre-IND meeting with FDA in the second half of this year with the objective of opening an IND for a Phase II proof of concept study.

Combined, these two epilepsy programs represent important product candidates within GW's epilepsy franchise to have the potential to yield a variety of individual orphan indications, providing GW with significant new market opportunities. These programs are funded completely by GW and we retain all commercial rights.

Beyond epilepsy, Justin previously commented on the fact that Sativex Phase III cancer pain trial remain on track for initial topline data towards the end of this year. We're also progressing the special protocol assessment with FDA for a proposed Phase III trial of Sativex in the treatment of multiple sclerosis spasticity. And with respect to our earlier stage pipeline, we have an active clinical program as follows.

Phase II trial with GWP42003 in the treatment of ulcerative colitis due to report topline data in the second half of this year. A Phase Ib/IIa trial of GWP42002 with GWP42003 in the treatment of glioma been ongoing with safety data on an initial cohort due this year. We recently started randomizing patients into a Phase IIb trial of GWP42004 in the treatment of type 2 diabetes and also into a Phase IIa trial of GWP42003 in the treatment of schizophrenia.

In addition to these clinical stage programs, our pipeline discovery activities remain very active and we are committed to generating a number of additional product opportunities for new GW cannabinoids over the coming years.

Let me now turn the call over to Adam George for the financial review. Adam?

Adam George

Thank you, Stephen. I intend to provide some general comments on today's Q2 financial results. A more detailed discussion of our results is given in the interim result press release that we issued earlier today. GW presents its financial results in accordance with international financial reporting standards or IFRS accounting rules in British pound sterling. For convenience purposes, I'll give US dollar equivalents for certain key numbers.

As a UK listed company, we're required to report results today for both the three and six month periods ended March 31, 2014. I'll start with Q2 revenues. Total revenues for the quarter were £7.5 million or $12.6 million compared to £7.7 million in Q2 2013. Our revenues consisted three income streams, firstly Sativex sales, which increased to £1.3 million from £0.4 million in Q2 2013, reflecting increased shipments to partners in the period. In-markets sales volume growth by our partners in Q2 was 43% over the prior period, driven by strong performance in Italy and Germany.

Next we have R&D fees charged to Otsuka, which decreased in Q2 by £1.2 million to £5.2 million linked to the reduction in pre-clinical cost charge to Otsuka following the end of our collaboration in June 2013. Finally, we have license fees, which were in line with Q2 2013, £0.3 million.

Cost of sales for Q2 increased in line with the volume of vials shipped to partners to £0.6 million from £0.2 million in Q2 2013. Total research and development expenditure in Q2 increased from £8.7 million to £11.9 million. This is driven by GW-funded R&D spend which increased to £6.1 million. This reflects our investment in Epidiolex and CBDV epilepsy research plus the cost of the other pipeline Phase II trials that are underway in ulcerative colitis, glioma, schizophrenia and diabetes.

Management and admin spend increased in Q2 by £1 million to £2.1 million. Of this £1 million, £0.7 million related to employee payroll taxes potentially payable in future on unrealized stock option gains and £0.3 million related to unrealized foreign exchange losses arising from retranslation of our US dollar denominated cash deposits into pound sterling at the closing exchange rate on March 31. This has resulted in a loss before tax for Q2 of £7.1 million or $11.8 million, which compares to a loss before tax of £2.3 million for Q2 2013.

In Q2, we then recorded a tax credit of £1.9 million, £1.6 million higher than the £0.3 million recorded in Q2 2013, reflecting the additional R&D tax credit that we expect to claim on increased 2014 R&D spend. For the six months ended March 31, 2014, we've now recorded total revenues of £15 million or $25 million. Looking at total R&D spend, we spent £21 million or $35 million in R&D, 39% higher than the first six months of 2013 and 58% of this was funded by Otsuka.

Management and admin spend of £3.6 million for six months is £1.6 million higher than the first half of 2013. And as explained for Q2, the increase is due to accounting for provisions for future employee or payroll taxes on stock option gains and unrealized exchange losses on retranslation of our US dollar cash deposit to the closing sterling exchange rate.

In terms of profitability for the six month period, we're showing a loss after tax of £8 million or $13.3 million. Clearly the increased to our reported loss is almost entirely due to increased investment in the Epidiolex program and other pipeline projects.

Turning to the cash flow for the six months to March 31, 2014, we recorded a net cash outflow operating activities of £5.2 million or $8.7 million. Capital expenditure was £2.2 million, consisting primarily of planned manufacturing facility upgrades. Total net proceeds from equity issued in the six months including receipts from our January fund raising, the subsequent warrant and option exercises totaled £63.7 million. So in total, we've recorded a net inflow the six months to March 31, 2014, of £57.5 million or $95.9 million. This resulted in a closing cash position at March 31, 2014, of £95.6 million or $159.4 million.

Finally, let me update our 2014 full year guidance. In terms of Sativex sales, we now expect strong double-digit revenue growth in 2014, driven by in-market sales volume growth by our partners. In terms of milestone income, I previously to expect an MS Phase III $5 million milestone from Otsuka close to the end of our 2014 financial year. This is now expected to be early in our 2015 financial year. With our enhanced financial position, GW-funded R&D will continue to increase the share as we progress our Epidiolex clinical program and our earlier stage pipeline activities.

Finally, cash guidance, the core operating cash outflow for 2014 including capital expenditure is expected to be around £24 million or $40 million, marginally higher than previous guidance. This would result in a healthy closing cash position of approximately £75 million to £80 million or $125 million to $133 million.

Thank you. I'll now hand the call back to Justin.

Justin Gover

During the remainder of 2014, we expect to see very active news flow from GW. With respect to epilepsy, we remain on track for an initial data disclosure from the Epidiolex expanded access INDs around the middle of this year. Following this initial disclosure, GW expects additional data on these patients as well as data on an increasing number of IND patients to follow during the second half of 2014 and beyond. And we'll periodically provide status updates through public disclosure.

We also expect the start of our first company-sponsored Epidiolex trial in Dravet syndrome designed to lead through an NDA with the FDA. In addition, we expect to open the IND to conduct trials of Epidiolex in the treatment of Lennox-Gastaut syndrome and also to open the IND for CBDV for Phase II proof of concept epilepsy trial.

I recognize that the epilepsy has been at the forefront of investors' attention. Whilst this is indeed a very exciting and important program for GW, I remind you that there is much going on at GW in addition to this program. For Sativex is the Phase III cancer pain trials nearing completion at the patient recruitment phase, the program is on track for initial data from the first of two Phase III trials of Sativex in cancer pain by the end of this year, with the second Phase III trial to follow shortly thereafter.

We also expect to complete in the coming months the SPA process with the FDA for the proposed US Phase III trial in MS spasticity. We also expect to report data from the Phase II ulcerative colitis trial in the second half, and we also expect to advance recruitment in our Phase II clinical programs in type 2 diabetes, schizophrenia, as well as the additional orphan program for glioma.

We look forward to reporting these important pieces of news to investors in the months ahead, a period in which we hope that GW's journey as the world's leading cannabinoid company will continue to go from strength to strength.

Thank you for your time today and for your interest in GW. I would now like to open the call for a few questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Ritu Baral with Canaccord Genuity.

Ritu Baral - Canaccord Genuity

Questions on the upcoming Epidiolex trials, one, what sort of seizure reduction do you think that you would need to see to reach a level of meaningfulness for FDA, EMA and general approvability and what level, if it's different, would you need to see to make a difference in patients' lives? And then two, the order in which you start these trials, which ones will inform the other? Do you feel that you need data from the Phase II/III before you start the second Dravet Phase III and will the two inform Lennox-Gastaut or will it be much more parallel than that?

Stephen Wright

Our plan is that the pivotal safety and efficacy studies for Epidiolex in Dravet syndrome will be more or less simultaneous. So we're not waiting for the results of the first pivotal efficacy and safety study. That's the Phase II/III study before we start the second. That's very important to note, first of all. Secondly, in terms of what we require from those studies to gain approval or to have a successful NDA, clearly we require a statistically significant difference between drug and placebo. And that's what the studies are powered on and that's the difference that we aim to detect. And so if it happens that we get a large-ish placebo response, then we would need a larger drug response. If it happens that we get a very small placebo response, then we'd need a relatively smaller drug response. It's the difference that matters.

With regard to whether or not the Dravet syndrome results necessarily imply that Lennox-Gastaut syndrome results will be also significantly in favor of Epidiolex, I think the answer is partly they do, yes. Clearly, it would give you a lot of confidence that Epidiolex would be likely be effective in one resistant chart to epilepsy syndrome if it had already been churned to be effective in another. However, we are intending to conduct our pivotal efficacy and safety studies in Lennox-Gastaut again more or less simultaneously with Darvet studies. So we'll actually see the results within a relatively short space of time in both development programs.

Ritu Baral - Canaccord Genuity

And as far as the design and prediction of the placebo, what will inform that in terms of the trial design? Will it be what you're seeing from the current INDs, even where they're open-label, or is it data in the literature?

Stephen Wright

I think the open-label extension information that we get in that, we'll be happy to present once we're confident in the outcomes later this year is that it will certainly help you to inform the likely response to drug. I think that's fair. I'm not sure that it helps it with placebo responses very much. We depend upon the literature for that and in both Dravet and Lennox-Gastaut and indeed in some other chartered epilepsy syndromes low single-digit to the mid-teens seems to be reasonably predictable for placebo responses.

Ritu Baral - Canaccord Genuity

Can you outline for us the sequence of Sativex Phase III data that should be coming towards the end of the year, basically how the data from the three different Phase III trials should be coming in?

Stephen Wright

Certainly and intention was that the first two of the large Phase III studies is the two studies which are more or less mirror image involving 380 patients in each study together with an open-label extension to those studies. They should come in quite close to each other around about the end of this year. We think that one will come in a little bit before the other. So one at the end of this year and one very shortly thereafter. So we retain on track to meet our previous guidance that we'd filing the NDA in the first half of 2015. There is a third study, as you know, which utilizes a different design, it utilizes an enriched design and that we intend that there should be an interim analysis in that study, if required, available to feed into the NDA process. And that study remains on track to provide its interim analysis. So we're very comfortable that the guidance we've given previously about Sativex in cancer pain remains viable and valid.

Ritu Baral - Canaccord Genuity

And the interim would be around the same time point as the first data in the Phase III?

Stephen Wright

Around about. It would certainly be ready to feed into the NDA in the first half of 2015, yes.

Operator

The next question is from Tazeen Ahmad of Bank of America.

Tazeen Ahmad - Bank of America

With regards to these IND trials that are underway, if you happen to see activity in epilepsy types other than Lennox and Dravet, even as earlier as the first two sites, would you be motivated to try to seek or send designation for the other types that you're seeing activity in, or would you want to wait to see results from all of your trials reading out before doing that?

Stephen Wright

I think that all the options are open to us honestly. Once we see data with what we regard as meaningful outcomes from the expanded access INDs. I think we have factor the feeds into this is the fact that we're hoping to get fast track status for Epidiolex. And once we've got fast track status, that will of course allow us to have a more expansive and open dialogue with FDA, in which these questions can be more readily addressed. But yes, I think those options are certainly open to us.

Tazeen Ahmad - Bank of America

And then so the follow-on trials that you just mentioned this morning, just so that I'm clear, is it the case that you would do a Phase II/III trials for Dravet and then another Phase III trial, but for Lennox you would two Phase III trials, is that right?

Stephen Wright

That's correct. We're making an assumption, which has yet to be completely fully tested that the pharmacokinetics and the dose ranging pharmacokinetics in Phase III that we're exploring in Dravet syndrome will be applicable to Lennox-Gastaut. We believe that's really a very safe assumption.

Tazeen Ahmad - Bank of America

I noticed that you filed an equity shelf this morning. Have you disclosed the amount and given your strong cash position, do you anticipate having to tap into this?

Justin Gover

As you know, recall the NASDAQ listing was a year ago actually as of May 1. So this is the first opportunity for the company to be shelf eligible since the listing. So this is very much a housekeeping exercise. So there is no dollar amount in the shelf. And there is no current plan to use it either.

Operator

The next question is from Phil Nadeau of Cowen & Company.

Phil Nadeau - Cowen & Company

My first is on the mid-year data release. You gave us some information about the characteristics of the data that we're going to get from two steps that patients have been on drug for about two months. I was wondering if you maybe could disclose a little bit more about the data release, will these patients how rigorously (inaudible) data where patients have a good idea of baseline seizure rates and then seizure rates after three months? I'm trying to get a sense of how much we'll be able relate to that data on the effectiveness of Epidiolex?

Stephen Wright

Firstly, there is a formal protocol, which the investigators in these investigator-led INDs submitted to the US FDA, and then our case record form that go along with the formal protocols. So the answer is yes, the data are being collected quite systematically in the same way they would be in a company-sponsored clinical trial and they cover the whole range of efficacy, quality of life, emergency, treatment requirements, episodes of status epileptic and so on, as you'd expect from a more formal or company-sponsored clinical trial. So we believe that the data we're going to be able to present will cover both efficacy, will cover episodes of hospitalization, will cover episodes of status epileptic and will cover safety. That's our intention. We engaged in the data collection from those expanded access INDs as we speak.

Phil Nadeau - Cowen & Company

Following this initial data release around mid-year, what are your plans for the second half of the year? I guess how often and in what forms will you submission data?

Justin Gover

I think we're currently focus as you are on the first disclosure. I think the amount of data will increase exponentially in the second half certainly because of the number of sites that will be starting treatment during that period. But I think we also need to collaborate with the physicians who are actually ultimately responsible for these INDs. So we're using the word periodic. And I think we would expect it to be from time to time. But you're not going to be getting weekly updates from mid-year onwards. But we'll try and ensure that they're reasonably regular and probably tie them in with medical meetings as possible.

Phil Nadeau - Cowen & Company

My second question is on the pivotal trials for Dravet and Lennox-Gastaut. It does sound like from talking to physicians on Dravet and Lennox-Gastaut, they are fundamentally different diseases. Dravet conditions do respond to therapy response. Lennox-Gastaut, it seems like patients really don't respond at all. How is that going to be reflected in the trial design? The Lennox-Gastaut, are those trials going to be much bigger and much more highly powered to maybe even pick up more subtle signals, or do you plan to have similar designs between the two programs, with just the patient characteristics being different or the diagnosis of the patients being different between the two programs?

Stephen Wright

It's a little bit the other way around. I mean Dravet, since there are no who currently approve medications in the United States, it's not regarded as an epilepsy syndrome that's pretty well responsive to treatment. It's really very well characterized syndrome. Whether diagnosis is pretty agreed, primarily clinical, but in many, many cases with a specific genetic mutation present. So whereas with Lennox-Gastaut, Lennox-Gastaut is really a description of a kind of seizure into which a number of syndromes can fit. And in Lennox-Gastaut as well, there is a widespread recognition that even though there are three current anti-epileptic drugs approved in that syndrome, mostly recently clobazam, there are a lot of children who remain resistant to those drugs. I think in both cases, in both Dravet and Lennox-Gastaut, there are a very substantial number of treatment-resistant children out there.

Now whether each of them respond differently to the current anti-epileptic drugs is not known, because there are relatively few placebo-controlled trials in Dravet syndrome and really not that many in Lennox-Gastaut either. It is fair to say though that the most recently approved drug in Lennox-Gastaut is also quite widely used in Dravet. So clobazam is fairly widely used in Dravet and many investigators think it provides some benefit. So I think that allows us some additional comfort that if we see efficacy in Dravet, it's really pretty likely that we will see in Lennox-Gastaut as well.

Phil Nadeau - Cowen & Company

I think we all saw the press release from a potential competitor that's moving their own formulation of CBD into development. I'm curious on your take on the orphan status that you have. Do you think should you be the first approved, your Almirall exclusivity would exclude them from the market, or could there be differences in purity or formulation that would allow both CBDs to be commercialized simultaneously?

Justin Gover

Yeah, the Almirall exclusivity is applied to the structure of cannabinoid. In the event that we are the first to achieve an NDA for Epidiolex in these orphan indications, it would prevent a synthetic of the same molecule being approved during the Almirall exclusivity.

Operator

The next question comes from Joseph Schwartz of Leerink Partners.

Joseph Schwartz - Leerink Partners

I was wondering if you could give us some more of your thinking behind the decision to not need a Phase I/II before going directly into Phase II/III in Dravet. And have you seen any data from the ongoing expanded access programs, or can you help us understand why the FDA is allowing an expansion there, because if we read through the lines, it sounds like they would not do that if they weren't going well anyway? So how much read through is there from all the positive updates that you're giving us today?

Stephen Wright

We have had exposure of around about 200 subjects and patients to our early CBD in Phase I and Phase II studies adults in other indications. So there is a substantial body of data regarding the pharmacokinetics and so on and our own CBD data. I think that's very important. We're not starting from sort of ground zero here. So what we're aiming to do is to demonstrate in part one of our study, the pharmacokinetics and safety in the target patient group, that is children with Dravet, and we know that FDA are very comfortable with that. And then move rapidly on to a pivotal safety and efficacy phase, which we're calling part two of the first study, aimed at using the optimum dose in children with Dravet. So I think it makes good sense. And I would emphasize that we do have a substantial body of existing clinical data in humans at all phases actually of exposure to CBD. So I'm sure that's the reason why we haven't been required to do a specific and separate Phase I study before moving on.

Joseph Schwartz - Leerink Partners

Was the FDA apprised of any of the ongoing safety or efficacy data from the expanded access treatment INDs?

Stephen Wright

The FDA received safety data from the investigators, that's one of the requirements, as do we. We've not ourselves formally transmitted our safety data on Epidiolex and the expanded access to FDA. But they are in receipt of the safety data from the investigators.

Joseph Schwartz - Leerink Partners

And then could I ask one the 42006 CBDV compound? How are you thinking about the development of that drug across in different epilepsy indications or even other indications and their strategic positioning? What are the advantages or the potential advantages over CBD that could give you a longer lifecycle? Can you help us think about the addition of that product to your portfolio?

Stephen Wright

There is very limited experience of 42006 in humans to date and there's no existing historical literature about its use in epilepsy unlike with CBD. So we are doing a much more conventional approach toward this development by first taking it into a proof of concept study, having had a success with Phase I, taking into a proof of concept study to show that it does indeed have anti-epileptic efficacy in humans and we have double-start towards the end of this year or possibly around the turn of the year. So that's what we're doing with CBDV, proof of concept first.

Justin Gover

With regard to the positioning, I think options remain very open to us right now. There is significant work ongoing with regard to determining the ultimate commercial positioning of CBDV. That is going on in-house right now. So I think that's a story that remains in-house for now. But it will impact Stephen's near-term ambition with regards to the proof of concept, which we need to do anyway.

Operator

The next question is from Lala Gregorek of Edison Investment.

Lala Gregorek - Edison Investment

I have heard the interaction between the physician INDs and the study that you'll be running. First of all, I was interested in what sort of overlap you have between the centers which have these expanded access INDs and the trials that you'll be running. Secondly, will the sufficient run INDs being fulfilling the dose ranges that you'll study in your Phase II/III? And then last, in relation to the centers that have got DEA licensing at the moment, it's going up from two to three, and I was wondering how many patients have the specific INDs within those centers.

Stephen Wright

Will we utilize the centers in the expanded access INDs within our own GW-sponsored program? The answer is absolutely yes. That's one of the reasons why we're confident about the feasibility of recruitment into the studies. It's always helpful to have physicians who are comfortable using your medicine if you're going to go into new clinical trials. It means we hit the ground running with the randomized controlled trials essentially. Certainly from the point of view of physicians being comfortable with the way the drug is being used, but also because these physicians have also been through the DEA licensing process. So again, we hit the ground running with regard to DEA licenses for new studies that they might be doing.

As far as the dose that's being used in the expanded access INDs, really the dosing across all studies regardless of whether they're investigator-led of GW-sponsored is guided by prior clinical experience and preclinical safety data, toxicology data in particular. So prior experience in the toxicology data provides the framework, the range, if you like, of doses that is considered acceptable to explore in humans. So we anticipate that the dose we're using or we're going to use in our GW-sponsored program will be very similar to the doses that are being used in expanded access INDs. And again, that gives us comfort.

Justin Gover

Just to clarify, what we're talking about here is the centers each obtained in IND under an expanded access IND, which relates to a certain number of authorized patients within each center. So the centers that are underway have in general being centers that receive authorization for 25 patients each. As Steve mentioned in the call earlier, one of those centers is actually recently expanded its authorization to 60 patients, but that's a recent development. So I'm not sure if I answered your question or perhaps you can just clarify whether there is something we're missing.

Lala Gregorek - Edison Investment

Can I have a fuller question in relation to the doses? Currently, what doses have been studied or the dose range that you've seen for Epidiolex?

Stephen Wright

In the expanded access INDs, the protocol initially started in children at 2.5 milligrams per kilogram per day. In two of the centers that have started dosing, that's actually been increased up to a starting dose of 5 milligrams per kilogram per day. That starting dose has been gradually being upwards actually at the rate of once per week up to a maximum of 25 milligrams per kilogram per day. In individual cases, investigators are seeking to use higher doses than 25 milligram per kilogram per day, because the drug has been very benign even at those levels. We've had no children withdraw from treatment due to any unwanted effects or incidentally due to the drug tasting bad. It's a syrup and we understand that the palatability seems very good as well as the tolerability.

Lala Gregorek - Edison Investment

So you touched about withdrawal. Are you able to provide any additional color on the one withdrawal that's been so far under the expanded access INDs?

Justin Gover

Lala, we're giving no color today. We'll do all of this when we have the data.

Operator

Our next question is from Kristina Cibor of Piper Jaffray.

Kristina Cibor - Piper Jaffray

Just want to ask a question about legalization of marijuana in many states. So does this in any way impact, complicate, confound or facilitate your own Epidiolex development? And then what is the status of DEA rescheduling of Epidiolex, if anything?

Justin Gover

All development program is frankly determined by the federal laws, which require FDA authorizations, INDs, DEA licensing, et cetera. So whether the state is legalizing medical marijuana or not doesn't really impact on our development program. And I think in a broader sense, with regard to children suffering from intractable treatment-resistant epilepsy, the prospect is an FDA approved prescription medicine is well recognized as a solution moving forward. And of course, the fact that you've seen such a high level of interest in these INDs I think is consistent with the view that physicians and families are of course, if it's all possible, seem to get access to Epidiolex as quickly as possible. It does raise, I'm sure, the awareness and I'm sure we're all aware of the epilepsy profile of CBD and having that study relevant is helpful to us as we think about our future.

With regard to rescheduling, that is a process which is done upon an NDA. That possibly could be outside of that. But in general, the process for a scheduled substance is it's first approved by the FDA together with that approval comes the scheduling recommendation and the DEA then the power and responsibility and reschedule. So unless there is any exceptional circumstance, we would expect the rescheduling to occur following the NDA.

Kristina Cibor - Piper Jaffray

Just one question on the size of the trial, but just wanted to confirm the numbers I have heard. So for the physician-sponsored INDs, did you say it's going to 300 patients overall for those physician-sponsored INDs?

Justin Gover

It's not a single study, Kristina. The 300 total is the sum of the different expanded access and indeed a few new individual and emergency INDs that have been authorized so far. As Stephen mentioned in main comments of the call, the focus is very much on the pivotal program at this point. So it's important for us, and I think we've closely collaborated with the sites on this that recruitment into the pivotal trials isn't compromised by these expanded access INDs. So I wouldn't expect ongoing acceleration of numbers in the same that you're seeing recently. And that's because attention and focus is for this next phase very much turning towards the pivotal programs.

Operator

The next question is from Tazeen Ahmad of Bank of America.

Tazeen Ahmad - Bank of America

Just with regard to the Phase II/III trials that are going to start, I know you've had no shortage. Patients want to enter the trials. But could there be any advantage of using the patients that are coming off of the three month IND trials and having them flow into the Phase II/III trial just in terms of continuity and being able to have data on specific patients for an extended amount of time?

Stephen Wright

The answer is no. It would possibly confound interpretation of the results I think too much. Also, prior to entry into the study, unless it's partly referenced back to Phil Nadeau's earlier question, the patients in the expanded access R&Ds on the go a very formal baseline evaluation of their seizure frequency. Now clearly had they been very recently exposed to Epidiolex, that baseline evaluation would be likely to be confounded by the prior. So one of the requirements for the formal trials is that they have not been exposed in the recent past to any form of cannabinoid.

Tazeen Ahmad - Bank of America

The Dravet Foundation meeting is coming up at the end of June. At this time, does the GW have any formal presence planned there?

Justin Gover

I don't think there is a formal presence down there. I think GW tends to attend these kind of meetings.

Operator

And that's all the time we have for today for questions. I'll turn the call back to management for any additional or closing remarks.

Justin Gover

Thank you. Just to round out the call by thanking everyone for their participation. Should be an exciting second half of the year for GW and we look forward to keeping you abreast of all developments and the pipeline as well. So look forward to the media IND release and then Q3 in early August. So thank you for your attention. And as always, we're very available for follow-up questions as and when necessary. Thanks again.

Operator

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.

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