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Raptor Pharmaceutical Corporation (NASDAQ:RPTP)

Q2 2014 Earnings Conference Call

August 7, 2014 4:30 PM ET

Executives

Georgia Erbez - CFO

Chris Starr - CEO and Co-founder

Julie Anne Smith - EVP, Strategy and COO

Analysts

Kim Lee - Janney Capital

Paul Matthias - Leerink Swann & Company

Lisa Bayko - JMP Securities

Jun Liu - Cohen and Company

Operator

Welcome to the Raptor Pharmaceutical’s Second Quarter 2014 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following management’s prepared remarks, we will hold a brief question-and-answer session. As a reminder, this conference is being recorded today August 7, 2014. I would now like to turn the call over to Georgia Erbez, Chief Financial Officer. Please go ahead.

Georgia Erbez

Thank you operator and welcome to today’s conference call to discuss Raptor’s second quarter 2014 financial results and an update on our business.

Before we start, let me remind you that today’s call will include forward-looking statements based on our current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties. Please refer to our filings with the SEC, which are available from the SEC or on our Web site for information concerning the risk factors that could affect the Company.

Joining me on today’s call are members of our senior management team, including; Dr. Chris Starr, Chief Executive Officer; and Julie Anne Smith, President and CEO, Designate.

Earlier today, Raptor issued its press release announcing our financial results for the second quarter and six months ended June 30, 2014, which has been posted on our Web site at www.raptorpharma.com. Our 10-Q for the second quarter ended June 30, 2014 was filed with the SEC today August 7th. A replay of this call will be available for the next two weeks on the Investor Relations section of our Web site.

Today’s presentation will begin with a corporate overview by Chris followed by Julie with an update on our operations. I will then go over the details of our financial results. After management’s prepared remarks, we will open the call to Q&A.

With that I will now turn the call over to Chris Starr.

Chris Starr

Thank you, Georgia. And thank you all for joining us today. The second quarter of 2014 was another period of strong progress for Raptor, both on our commercial efforts and in moving our clinical development pipeline forward. In the second quarter of 2014 PROCYSBI achieved net sales of $16.3 million which represents a 35% increase over the $12.1 million of net sales reported for the first quarter of this year.

Cystinosis sales since launch of PROCYSBI were $45.3 million. We have now completed our first full year on the U.S. market with PROCYSBI in light of our sales success in the U.S. so far this year and the initial success we are experiencing in Germany we are raising our net sales guidance for 2014 to a range of $65 million to $70 million which is an increase over our prior guidance of $55 million to $65 million. We are very pleased with the pace of our PROCYSBI launch in Germany our first European country and Julie will provide additional details on our European commercial activities later in the call.

Last month Raptor announced that we had increased our cash reserves by completing a $60 million convertible debt offering combined with $10 million of additional funding in a revised synthetic royalty loan agreement with HealthCare Royalty Partners. After two years of working together following our first investment of Raptor we are very pleased that HealthCare Royalty Partners have agreed to increase their investment in the company. Georgia will review some additional details regarding our financing later in the call.

And finally as part of our management succession planning at Raptor we announced several weeks ago that I will be retiring as Raptor’s CEO at the end of this year after nine years since co-founding the company. I will remain in the Board and will be active consultant to Julie and the company. At the time of that announcement Julie was made President and CEO Designate but would become CEO and member of the Board of Directors effective January 1, 2015.

After working with Julie for nearly two years at the company I am very pleased to have her taking over this role. She is a proven leader in orphan diseases and has been instrumental to Raptor in the launch and commercialization of PROCYSBI for experienced and commercializing and developing products for rare disease along with her ability to recruit and build talented teams who enable Raptor to realize our vision and future direction.

Raptor has all the characteristics of the most successful orphan companies. Working in areas of significant unmet medical need we believe we have the best available product to meet those needs, we have proven our ability to penetrate our core markets and we have multiple opportunities for expansion within our sustaining franchise in the due indications. I have never been more confident in the future of success of Raptor.

At this point I’d like to turn the call over to Julie to provide an update on our PROCYSBI commercial activities and operations. Julie?

Julie Anne Smith

Thanks, Chris. I am delighted to be moving into this new role and I am looking forward to continuing Raptor’s tradition of delivering superior clinical and operational results to help people with rare diseases. We are committed to our strategy of maximizing the value of PROCYSBI in nephropathic cystinosis and to grow and diversify our sustaining franchise into new indications beyond as we drive towards long-term sustained growth. We will expand our global footprint deliberately to maximize the value of each product opportunity while exhibiting financial discipline.

PROCYSBI was launched in the U.S. just over a year ago in June 2013. We are thrilled with the pace of PROCYSBI uptake and the overall market penetration. On the international front, we introduced PROCYSBI in Germany in April of this year and while we are still early in the launch our performance thus far is ahead of plan. Globally 237 unique patients have received PROCYSBI cumulatively as of the end of June compared to 199 at the end of March and 165 at the end of 2013. This consistent increase in the number of patients being treated with PROCYSBI resulted in net product sales of $16.3 million in the second quarter.

In the U.S. during the second quarter, approximately 10% of revenues came from new prescriptions and 90% from refills. There is still plenty of growth opportunity in the U.S. cystinosis market. In the second quarter approximately 64% of prescriptions came from new prescribers and we have more than 50% of the under-6 and over-18 patient segment yet to initiate for PROCYSBI therapy. The vast majority of PROCYSBI patients have made it successfully through the insurance reimbursement process and only a very small percentage of our patients utilized the patient assistance program.

We believe there were several drivers for this very strong quarterly performance. First compliance with PROCYSBI therapy remains ahead of our expectations. Medical adherence to PROCYSBI is critically important for this patient population and we have multiple efforts to ensure patients build their prescriptions on time. In the last week of June, we saw an uptick in early refills ahead of the 4th of July holiday week. We believe this reflects patient’s belief in the importance of compliance and the desire to have drug on-hand before their holidays.

As our experience in cystinosis has deepened the long-term benefits of PROCYSBI and cystinosis are becoming clearer. The June publication in Journal Pediatrics highlighted that would sustain compliance to therapy over a 24 month period, patients can see consistent white blood cells cystine depletion, maintenance of kidney function and sustained quality of life improvements. These data has been submitted to the FDA to support a label extension.

So to further reinforce and support the awareness importance of overall disease management, I am pleased to announce the collaboration with Global Genes, a patient foundation who will be hosting a young adult cystinosis camp. Campers can come together and share their experiences in coping with their disease and how they successfully managed their medical care. In addition, we are partnering with the cystinosis research network to host regional patient and caregiver meetings with the same objectives.

In Germany, we are seeing very strong demand for PROCYSBI since the drug became available in early April. Raptor’s German team was fully staffed and onboard as of April 1st and they’ve done an excellent job of identifying positions treating cystinosis patients in Germany. As of the end of June our team has had multiple contacts with all physicians know to treat each German cystinosis patient identified prior to PROCYSBI launch. I am excited that we’ve expanded our European leadership team with the appointment of Françoise De Craecker as Senior Vice President and General Manager of Raptor’s European Operations. Françoise comes to us with extensive commercial product management experience and expertise in pharmaceutical launches and rare disease markets globally. Most recently, she served as the vice president and general manager for the European region of rare disease business unit at Shire. At Raptor, Françoise is responsible for managing our European operations and executing Raptor’s plans to commercialize PROCYSBI in Europe.

As we’ve executed a solid launch in Germany, we are now preparing to launch into the next wave of European countries. We have completed our market access plans in several additional priority European countries. And now under the direction of Françoise, we have begun to methodically build the infrastructure to make PROCYSBI available as efficiently and expeditiously as possible. Patients across Europe are currently able to access German products through regional exportation. Moreover, physicians in markets outside the European Union have requested PROCYSBI on a named patient basis. As worldwide demand for PROCYSBI builds we are preparing access programs to meet those patient’s needs to revenue generating programs.

In our ongoing efforts to identify as yet undiagnosed cystinosis patients, we are excited to report the first update of our genetic screening program. We have preliminary results from the first 500 patient samples taken from the beat of 4,200 unique end-stage renal disease patients in biorepository. From this first group of 500, there are three patients with homozygous CTNS mutations consistent with cystinosis. In addition, there are 10 patients with CTNS patients that maybe consistent with compound heterozygosity. Therefore they may have cystinosis or maybe cystinosis carriers. While additional analysis is needed to confirm the correlation between genotype and disease presentation, we recognized that these patients already had kidney dysfunction, a prominent early feature of cystinosis. As evidenced by their inclusion in the DaVita sample of end stage renal disease patients. Note that these end stage renal disease patients are not diagnosed with cystinosis and have not been treated with cystine depleting therapy.

We believe that these findings validate our hypothesis that made on cystinosis patients maybe masquerading of the chronic or end stage renal disease patients without an accurate diagnosis of cystinosis. It’s too early to say if this frequency rate will continue or that the compound heterozygous mutation pool will produce treatable cystinosis patients. But based on these encouraging initial findings we do plan to expand our screening efforts by seeking additional sample pools from transplant centers and plan to finish screening all the diseases sampled by year’s end.

Turning to our ongoing clinical programs, our second Phase II trial to evaluate the safety and efficacy of our RP103 as a treatment for NASH and children 18 years and younger exceeded its enrollment target of 160 at January 2014 with a total of 169 patients enrolled. The last patients are expected to complete the trial in January 2015 so we’re on-track to receive results in the first half of 2015. As a reminder the primary endpoints of this study are two point improvements in the NASH score with no worsening of fibrosis as determined through liver biopsy. This study is being conducted under a CRADA in collaboration with the NIH.

During the first quarter of this year we announced encouraging 18 month results from our ongoing clinical trial of RP103 and Huntington’s disease. In Europe in order to receive orphan drug designation companies are required to submit clinical trials safety and efficacy data supporting the applications. We submitted our orphan drug designation application this spring and earlier this week we announced that based on this application we were granted orphan designation by the European commission. Orphan designation is a required step in obtaining exclusivity.

Once approved for Huntington’s disease orphan exclusivity would confer 10 years of market exclusivity in Europe and seven years in the U.S. As we did with cystinosis we’re working with distinguished outside experts including Huntington’s disease opinion leaders, clinical investigators and former FDA panel members to prepare for discussions regarding our trial data. We plan to meet with regulators soon for the purpose of defining the next step towards the potential approval of RP103 for Huntington’s disease in the U.S. and Europe.

With that I will now turn the call back to Georgia for a discussion of our financial results.

Georgia Erbez

Thanks Julie. For the three months ended June 30, 2014 Raptor recognized $16.3 million in PROCYSBI net product sales. This result compares favourably with street consensus estimates for the second quarter net revenue as reported by FactSet and Yahoo! of $14.6 million. For the six months ended June 30, 2014 Raptor reported net sales of $28.4 million. Sales in the prior year periods were nominal gross to net adjustments, including distributor discounts and allowances for returns and rebates, including those paid to Medicare and Medicaid in U.S. The cost of sales for the second quarter was $1 million or 6% of net revenues. Cost of sales this quarter was lower than anticipated due to onetime adjustment of expenses related to our commercial manufacturing processes.

Cost of sales includes expenses such as cost of commercial products sold, manufacturing and supply chain cost, product shipping and handling expenses, amortization of product approval milestone payments and royalties owed to UC San Diego. Research and development expenses for the second quarter of 2014 were $11.1 million versus $6.2 million for the second quarter of 2013. R&D expense for the six months totalled $20.6 million versus $14.6 million in the comparable period for 2013. The increase in the current year over the prior period was primarily due to increases in staffing and associated salaries and benefits from medical, clinical and regulatory personnel, preclinical studies and clinical trials and non-commercial drug manufacturing expenses.

Selling general and administrative expense were $13.3 million for the second quarter of 2014 compared to $9.4 million for the period a year ago. SG&A expenses were $25.4 million for the six months ended June 30, 2014 compared to $17.2 million for the prior year period. The increase in the current year was primarily due additional sales and marketing cost for the commercialization of PROCYSBI in the U.S., the establishment of our EU commercial headquarters and build out of our German commercial team for our recent launch of PROCYSBI in Germany and other compensation, administrative and facilities cost.

Interest expense for the second quarter of 2014 was $3.5 million compared to $1.1 million in the second quarter of 2013. For the six months ended June 30, 2014, interest expense was $6.5 million compared to $1.8 million for the six months ended June 30, 2013. The increase over the prior year period was due to a $50 million debt facility the company entered into with HealthCare Royalty Partners in December in 2012 that included a fixed component based on the outstanding principal and a variable interest expense royalty fee based on net product sales.

There were nominal product sales reported for the comparable prior year periods and therefore the royalty fee was immaterial as PROCYSBI was not available commercially in the U.S until June 2013. The net loss for the second quarter of 2014 was $12.7 million or $0.20 per share compared to a loss of $24.1 million or $0.43 per share in the second quarter of 2013.

On a non-GAAP basis excluding non-cash common stock non-cash warrant expense and stock-based compensation expense, net loss for the second quarter was $9.4 million or $0.15 per share. This compares to non-GAAP results for the second quarter of 2013 of a loss of $22.3 million and $0.40 per share. Raptor provides non-GAAP financial measures which I believe can enhance an overall understanding of its financial performance when considered together with GAAP figures. Please refer to today’s financial results press release for a full discussion on this subject.

Our reported cash and cash equivalents as of June 30, 2014 were $58.1 million compared to $68.1 million at the end of the first quarter of 2014 and $83.1 million as of December 31, 2013. Our cash burn in the second quarter reflects support of our commercial, clinical and corporate infrastructure as well as our initial efforts to expand our manufacturing capabilities and capacity. Our reported cash balance does not include proceeds from the financing we announced in July as it was completed after the close of our second quarter.

In this financing we raised growth proceeds of $70 million. This was accomplished in two separate transactions. The first involved a $10 million increase in our Synthetic Royalty debt facility from 50 million to 60 million which was also accompanied by a restructuring of the terms of that facility which I will discuss in a moment. In addition, we raised $60 million in an 8% note that is convertible $17.50 per share which represents a 50% premium to our share price at announcement. On a pro forma basis, risk financing brings our current cash reserves to approximately 124 million as of the end of July.

Now I would like to take a few minutes to provide you with some insight on how to calculate the interest expense associated with our debt as it has changed since the completion of this financing. Our interest payments generally have two components; a fixed interest payment and a variable royalty payment. First, the based fixed annual interest rate is originally 10.75% on the entire $50 million under our Synthetic Royalty financing transaction. This component has been reduced to 8%. This interest component remains constant and is evenly distributed from quarter-to-quarter. The interest rate on our convertible debt is also 8%, so be sure to include it as part of your interest expense projections.

The second component is a variable tiered royalty based on net sales. Previously it was calculated as 12.25% on the first $25 million in net sales in a calendar year followed by a 6% royalty on the second $25 million of net sales. Under the revised terms, these two revenue tiers have been consolidated and revised to 8% on the first $50 million of PROCYSBI net sales. Finally any net sales over 50 million in any calendar year are subject to a 2% royalty and this has not changed.

For clarity, these royalties apply only to the $60 million of Synthetic Royalty debt. And as you are updating your models, please keep in mind that as net revenues increase, the variable component of the interest expense will change. Also when we go from one calendar year to the next the calculation on net sales starts over again. All interest and royalty payments associated with our debt, are combined and appear on the interest section of our income statement.

As Julie and Chris stated earlier, we experienced strong sales performance in the second quarter. Our sales continue to be concentrated in small patient population. As a result any change in usage patterns can produce some variability in our quarter-to-quarter growth rates. However, based on our continued steady growth in U.S. and strong launch in Germany, we are raising our annual guidance for 2014 net sales to a range of $65 million to $70 million and it is consistent with our expectations of an average of 20% quarterly growth for the year ended 2014. While we have been able to produce strong revenue performance we continue our tradition of operational efficiency. Our cash operating expense range remains at $80 million to $90 million for 2014 which has not changed from our previous guidance.

As a reminder, this operating expense forecast does not include expenses related to cost of goods sold or non-cash related stock option expense. Our current cash and cash equivalents including the estimated proceeds from our July financing are sufficient to fund operations at least through the first half of 2016.

This concludes this afternoon’s prepared remarks. At this time, I will turn the call back over to the operator to begin our Q&A session.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And the first question comes from Kim Lee from Janney Capital. Please go ahead.

Kim Lee - Janney Capital

Just a couple of questions here when you mentioned the demand in PROCYSBI and the compliance I mean what were your internal assumptions for compliance rate?

Julie Anne Smith

Hi Kim, this is Julie. I think the first part of your question got cut off you were asking about management compliance rates but was that specific to the U.S.?

Kim Lee - Janney Capital

Yes, was U.S.

Julie Anne Smith

Yes, so our initial compliance expectations were based both on the traditional compliance rate seen in this patient population which as you know were very low but we also looked at the chronic therapies for other ultra-orphan markets and those compliance raised were typically very high. And so we aired on the higher end of the compliance expectation. I don’t think it’s appropriate for us to share specific assumptions included in our internal models but we’re really pleased with the compliance rate which is high by industry standards.

Kim Lee - Janney Capital

And would you expect this compliance to continue throughout this year how long do you expect compliance to remain at these levels?

Julie Anne Smith

We’re doing everything we can from our medical and commercial teams in the field to support these patients to make sure they’re refilling on time, to make sure that they have rapid education and communication with any questions that they have and any issues that arise regarding the PROCYSBI therapy. And that’s going to continue that effort, it’s going to continue what will be a strong focus of ours through the rest of 2014.

Kim Lee - Janney Capital

Okay, thanks for that clarity. And also in Germany can you tell us how many patients are on drug in Germany now and also for the overall global patient population have you in addition to the patients that you found serious blood screens have you revised your overall target population? Thanks.

Julie Anne Smith

So we know that public estimates in Europe I would say that there is about 800 patients in all of Europe and on our last quarterly call we talked about mapping well over 500 at those patients just in a few markets to their treating physicians. Because of the small patients population I think it’s we’ve been advised that we shouldn’t be talking about specific patient numbers per country. And so we won’t be doing that for Germany or going forward.

What we can say is we received this really positive signal in the screening program for adult orphan cystinosis patients in the U.S. that there is certainly a cache of undiagnosed patients out there. Patients there are currently diagnosed with some other kidney disorder and I think it’s too early to say how that translates into market size any change to our market size certainly we do this as upside potential but we have to I think expand the screening program we’re going to be going back to the providers of care for those specific patients that who came back with cystinosis mutation and we will be confirming through a lab test with white blood cells cystine depletions or levels of white blood cell cystine. And I think there is going to be some time now to be work through expanding the program and understanding the full implications before we can I talked about how it translates to an increased market size.

Kim Lee - Janney Capital

Okay, great. And then one last question can you provide an update on your Leigh syndrome program do you still anticipate interim results by the end of this year? Thanks.

Julie Anne Smith

Yes, we started enrolling patients in our mitochondrial disease patients trial in the second quarter and we’re continuing to enrol that study right now it looks like that enrolment might be a little bit slower than we anticipated so we’ll provide an update as soon as it becomes sufficiently clear when results become available.

Kim Lee - Janney Capital

Great, thanks.

Operator

The next question comes from Paul Matthias from Leerink. Please go ahead.

Paul Matthias - Leerink Swann & Company

Thanks very much for taking my questions. My first is on Europe I am wondering what is the status of pricing discussions in countries outside of Germany, when you think you might be able to generate sales in other European countries if any could come in the second half of this year and also whether or not the 144 million euro price in Germany could serve as a reference? Thanks.

Julie Anne Smith

That’s great Paul and I am going to start with the last part of your question first, the German price rule as a reference for the rest of Germany and actually for the rest of the world, it is a public price, it’s in public data bases, and other countries we will refer to it. And second the status of our pricing discussions it’s a little bit misleading to think that there are always centralized pricing and reimbursement discussions at all countries. As we have said, we are able to export Germany products to other countries now and very often in doing so you can maximize the availability of other sources of funding within their countries other than a centralized pricing source, so our market access plans have contemplated both sources of funding, both going through the normal mechanisms of pricing reimbursement as well as maximizing all available sources of funding for cystinosis patients. And we are in the process of proceeding on both of those routes right now. We do anticipate that we will be able to generate just a little bit of revenue out of those additional markets by the end of the year but it’s too early to say. We’re -- Chris Starr has talked about how much and how many countries and so on and so forth because it’s something that is just outside of our control.

Paul Matthias - Leerink Swann & Company

And then on the guidance raise I wanted to drill down a little more, what did you see over the past quarter that was, that exceeded your expectations and are you know for the rest of this year, have you become more optimistic on both the U.S. and Europe or just one what’s different now when you first guided the business at the beginning of the year? And then I have one more. Thanks.

Julie Anne Smith

So we are really pleased with the second quarter performance that we saw which was driven both by the U.S. and Germany. So 35% quarterly growth certainly exceeded our expectations as we talked about on our last quarterly call, but with continued high compliance rates with the consistent added growth of new patients, week-over-week with a warm market reception in Germany and with the strong uptick there. I think all of that’s together and it came together to make us think a little bit more bullishly about the 2014 guidance.

Paul Matthias - Leerink Swann & Company

And then just one more on reimbursement and pricing. I am wondering I think you’ve guided a long-term price of 250,000 in the U.S. have we hit that yet or are we still trending a little bit above it as we were before with some of the heavier patients going on drug. And then as far as reimbursement, how has that been going and have any payors taken advantage of the capitation program? Thanks again.

Julie Anne Smith

Again thanks Paul. We continue to expect that the average annualized price for PROCYSBI in the U.S. net of compliance and discounts and all of that will track towards 250,000 by the end of the year and that is asset based priced for us. This quarter was a little bit over that again like we mentioned last quarter not materially different from last quarter. Reimbursement as well is going very well in the U.S. we’ve had multiple clinical reviews by major commercial payors and we’ve continued receive good treatment by those reimbursers, they continue to treat us like other ultra orphan products and we are very pleased. And I think the market access team that we put in place in the field earlier this year has really done a terrific job educating and working with the payors.

Operator

The next question comes from Lisa Bayko from JMP Securities. Please go ahead.

Lisa Bayko - JMP Securities

I have just a question if you could possibly breakdown sort of the U.S. sales from Germany?

Julie Anne Smith

We’re not going to provide regional breakout of sales it’s just too early and again with the combination of just a small number of patients in Germany, there is we have to really think about waiting until we have more of a region to talk about in Europe. So we won’t be doing that just yet.

Lisa Bayko - JMP Securities

Okay. And so I guess my next question was just within Germany how many are actually are as you described like not how many but just proportionally is your German number mostly from Germany or is it a lot of the patients from exportation of PROCYSBI?

Julie Anne Smith

Yes, great question. Today all of the sales we have reported from the second quarter that came from Germany are attributed to German patients. We’ve received prescriptions from other countries and then we are in the process of working through the terminal supply chain to be able fulfill those prescriptions.

Lisa Bayko - JMP Securities

And then I noticed you had a pretty low cost of goods for the quarter, is that the kind of run rate we should think about going forward?

Georgia Erbez

No, Lisa. Hi, it’s Georgia. We did have a small adjustment that was made in our cost of goods sold this quarter related to some manufacturing process charges that we had. So it is as I said in my prepared statements it was the cost of goods sold is a little bit lower than we expect going forward because of that one-time charge?

Lisa Bayko - JMP Securities

Okay, fair enough.

Georgia Erbez

It was a one-time credit I should say.

Lisa Bayko - JMP Securities

Okay, fair enough. And then I just wanted to just understand more disproportionally I know you haven’t treat a lot of kids yet as we look at the number of cystinosis patients at least that we know exist today I know there is that would be others that are undiagnosed whatever of those and today how does the breakdown between kids and adults?

Julie Anne Smith

Yes, it’s a great question. So first I would say that it’s really refreshing and reassuring as of the age distribution in Germany address to the nearly identical to what it is in the U.S. and that’s from an identified patient perspective. So, we think we have a pretty good handle on the diagnosed patients today. And as a reminder there is slightly more patient adult patients just examined those patients than there are paediatric patients that is under 18. We have excellent penetration into the seven to 18 age segment in the United States as we said on the call we have a little bit more than 50% of the market to still to grow into in the under six and the over 18 population.

Lisa Bayko - JMP Securities

Thanks a lot.

Operator

The next question comes from Jun Liu from Cohen and Company. Please go ahead.

Jun Liu - Cohen and Company

Thanks for taking my question and congrats on the great quarter just most of the questions have been answered so I am going to ask a couple of other questions digging deep here. With regards to your expansion program with generic screens what kind of white blood cell 15 levels have you been seen because in the homozygous and heterozygous because in the end of that the white blood cell 15 level that determines whether you get treated or not?

Julie Anne Smith

Hi Jun great question so just to clarify as we examine genetic screening programs there are multiple sets involved here first the DaVita biorepository samples were samples collected previously and we are able to extract DNA and perform the mutation sequencing on those samples but we cannot use those samples to accurately assess the amounts of white blood cells cystine in those samples and that’s because of an interaction that happens with the collections within the collection tube. So that’s where we are working with DaVita to go back to those providers and to create a clinical program where those patients can now be tested with the white blood cell cystine. Now as a reminder the diagnosis of cystinosis is made both by a constellation of clinical symptom and the biochemical white blood cell cystine blood test. So we already have now a mutation but clinical symptoms and what we’ll be looking for is the white blood cells cystine confirmation.

Jun Liu - Cohen and Company

Fair enough, and one more question with your Huntington’s disease program can you remind me what the dosing was again and if it was higher than what you would typically use for cystinosis what kind of side effects have you seen in those studies?

Julie Anne Smith

Yes, thank you for that question. In the Huntington’s disease trial this is in stage one patients early stage patients the dosing was 1,200 milligrams per day divided every 12 hour doses of 600 milligrams. So that is lower than the typical and certainly the maximal daily dose for a cystinosis patient. We do not adjust the Huntington’s dose by patient weight or body surface area and so accordingly the overall dose is a bit lower. The side effects have not been published they were except for a general statement of the tolerability of our RP103 in Huntington’s patients in the trial we have not talked publicly about the specific rates. But overall in that general summary the rates were very good, very similar to placebo actually some of the side effects that we might have expected to see the GI discuss was the most frequent but it appears to be well tolerated in this population asset dose.

Jun Liu - Cohen and Company

Got you, thanks for that clarification and congrats on the great quarter again.

Operator

There are no further questions at this time. I will now turn the call back to you Dr. Starr for your concluding remarks.

Chris Starr

Thank you very much. So thank you all for attending the call. We’re obviously very pleased with our quarter. Hopefully you all are as well. So, we look forward to updating you on the continuous progress in the future on our development programs and obviously our staging of our commercial launch globally, so if you have any further questions or if you need any different information please contact me or Georgia and have a pleasant afternoon or evening. Thank you.

Operator

The conference is now concluded. Thank you for attending today’s presentation. You may disconnect.

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