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Concert Pharmaceuticals, Inc. (NASDAQ:CNCE)

Q2 2014 Earnings Conference Call

August 12, 2014 08:30 AM ET

Executives

Justine Koenigsberg - VP of Corporate Communications and IR

Roger Tung - President and CEO

Ryan Daws - CFO

Nancy Stuart - COO

Analyst

Joe Pantginis - Roth Capital Partners

Brian Abrahams - Wells Fargo Securities

Mike King - JMP Securities

Bert Hazlett - Ladenburg

Operator

Good day ladies and gentlemen and welcome to the Concert Pharmaceuticals Second Quarter 2014, Financial Results Conference Call. At this time all participants are in listen-only mode. Later we will conduct a question-and-session and instructions will follow at that time. (Operator Instructions)

I would now like to introduce your host for this conference call, Ms. Justine Koenigsberg. You may begin, ma'am.

Justine Koenigsberg

Good morning and thank you for joining us for Concert Pharmaceuticals second quarter 2014 investor update. I'm Justine Koenigsberg, Vice President of Corporate Communications and Investor Relations at Concert. By now you should have received a copy of our press release announcing our second quarter results that was issued earlier this morning. An electronic copy of our press release is also available on our Web site at concertpharma.com. Joining me today are Roger Tung, our President and Chief Executive Officer; Ryan Daws, our Chief Financial Officer; and Nancy Stuart, our Chief Operating Officer.

During the call, Roger will provide an update on our clinical pipeline and Ryan will discuss our financial results before we open the call for your questions. Before we begin, I’d like to remind you that today’s discussion will include statements about the company’s future expectations, plans and prospects that constitute forward looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward looking statements, as a result of various important factors including those discussed in the risk factor section of our most recent quarterly report on Form 10-Q filed with the SEC. In addition, any forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

While we may elect to update these forward looking statements at some point in the future we specifically disclaim any obligation to do so even if our views change. With that, I’d now like to turn the call over to Roger.

Roger Tung

Thank you, Justine. I’d like to thank everyone for joining us this morning. We made important clinical and regulatory progress in a number of programs first half of this year. We now have four Concert discovered compounds in clinical development; we believe we’re tracking nicely to our goal of having [indiscernible].

I will begin with a brief update on progress we’ve made with CTP-499, our potential treatment for Diabetic Nephropathy and our partner programs JZP-386 for Narcolepsy and AVP-786 for Neurologic indications including depression. Then I’ll discuss CTP-354, which we’re developing for spasticity and specifically the Phase I results from our Imagen Gene X study evaluating brain receptor occupancy following 6 milligram multiple doses.

Starting with CTP-499, last month we provided an update on our end of Phase II meeting with the FDA. The meeting provided a number of important takeaways. First, the program is well positioned to advance into Phase III clinical development. The FDA indicated general agreement on the end points for our proposed Phase III trial. We expect that a time to event analysis, where an event is defined as the first to occur of a 50% or greater increase in serum creatinine or progression to end stage renal disease, would support a potential NDA.

Second, the FDA provided flexibility for Phase III development plan so that we may conduct either two parallel clinical trials with 499 or a single trial evaluating two doses of 499 compared to placebo. Our planned next step with the program is to begin negotiations with FDA regarding a special protocol assessment later this year.

As we stated previously, we expect that a Phase III program in diabetic nephropathy would be conducted with [indiscernible]. Turning to JZP-386 or Deuterated containing analogous sodium oxybate for Narcolepsy, last month we initiated the first in-human Phase I clinical trial under our collaboration with Jazz Pharmaceuticals. This trial is designed to assess safety, pharmacokinetic and pharmacodynamic properties of JZP-386 using sodium oxybate as an active control.

This trial is intended to further evaluate the potential of JZP-386 to provide once-daily dosing and support dose selection potential for the trials. The clinical progress of our other partnered programs remain on track. For CTP-730 would be anti-inflammatory compound under our Celgene collaboration, we expect to initiate the first Phase 1 clinical trial in the fall. For AVP-786 or deuterium containing analog dextromethorphan or collaborate, our Avanir Pharmaceuticals has announced plans to advance the compound into Phase II testing next month for the adjunctive treatment of major depressive disorder.

Moving on to CTP-354, I’m pleased to review with you the programs positive clinical and regulatory advances. These developments support our continued progression of 354 as a potential first-in-class treatment for spasticity associated with spinal cord injury and multiple sclerosis and it’s potentially in other indication that may benefit from a subtype selective GABA(NYSE:A) modulator. As a brief reminder, CTP-354 has a mechanism of action broadly similar to benzodiazepines.

The potential advantage of 354 is into receptor subtype selectivity, which differs from that of any currently marketed drugs and was designed to avoid a number of the side effects that current limit for broader use of benzodiazepines including dose limiting sedation, memory loss and muscle discoordination. In addition, in contrast for the most commonly used oral medicines for spasticity, which are typically dose 3 or 4 times daily, 354 has [indiscernible] that is well suited for once-daily dosing. We intend to advance 354 into Phase II clinical trials in spasticity associated with spinal cord injury and with multiple sclerosis. We believe that 354 has strong potential to be the first non-sedating oral treatment from these indications (Ph). On the clinical front, we successfully completed our Phase 1 imaging study of evaluating 354 stability provided to brain GABA(A) receptor in healthy volunteers. This study was conducted in conjunction with our completed Phase 1 single ascending dose trial and our ongoing Phase 1 multiple ascending dose trial evaluating safety and pharmacokinetics in healthy volunteers.

Our imaging study had two parts, first, evaluating the drug single ascending doses and second evaluating receptor occupancy from repeat doses of 354 to provide study state (Ph) exposure. Each dose in cohort of the imaging study was designed to evaluate two healthy volunteers. We previously reported the single dose receptor occupancy results which allowed us to understand the relationship between binding to brain GABA(A) receptor and plasma concentrations we believe will be an important component in dose selection for future clinical trials.

I’m pleased to say that this relationship was confirmed in the multiple daily dose portion of Phase 1 imaging study suggesting that we can predict receptor occupancy based fully on plasma concentrations and that there is no relation of CTP-354 in the brain on repeat dosing.

After nine days of daily dosing of 6 milligrams of 354 each of the two subjects had 49% receptor occupancy with corresponding average plasma concentrations of 96 milligrams per meal. Notably, the average weight of the two subjects in the multiple dose portion of the study was high, their average weight greater than 220,000. The relationship between drug plasma level and receptor occupancy was remarkably consistent with what we have ensured in the single dose portion of the study confirming that there is no drug accumulation in the brain. We’re pleased that we’re seeing much greater receptor occupancy that can be tolerably achieved with approved [indiscernible] supporting our belief that 354 may provide clinical benefits associated with GABA(A) modulation including spasticity without just limiting sedation.

CTP-354 was generally well tolerated with no serious adverse events reported in state and no volunteers discontinued treatment. Both subjects in this open label study experienced mild (Ph) adverse spend including transient disease and sleepiness, generally a result of the first few days of the trial no over sedation was observed. We also had recent positive news on the regulatory front with the FDA lifting the previously disclosed partial clinical hold on 354 following our submission of an institutional toxicology study.

As a reminder, 354 was associated with minimal, if any, toxicity in our previous pre-clinical testing. Therefore, the FDA requires that we conduct an additional single species short-term toxicology study to determine the maximum tolerated or maximum feasible dose.

We are now evaluating 12 milligrams in the healthy volunteers as part of our ongoing Phase 1 multiple sending dose clinical trial. We plan to report the Phase 1 results at the American Neurological Associations Annual Meeting in October. Our Phase 2 last call for evaluating 354 in spasticity associated with spinal cord injury and with multiple sclerosis. The patient populations represent a significant unmet medical need that we believe can be readily addressed with specialty call point.

Briefly, I’d like to discuss the study design for an anticipated Phase 2 trial with 354 in spinal cord injury. We expect to study three doses in a randomized multicenter double blended study of up to 50 patients with moderate to severe spasticity. Each patient will receive a randomized two weeks treatment with either Placebo or CTP-354 separated by washout period.

We expect to take our patients down or possible offer their existing spasticity medications to better assess the fixed (Ph) size of the drug in this patient population. We expect the primary end point will be in the determination of a dose response relationship based on changes in lower spasticity using the Ashworth Scale, which measures muscle tone based on physical examination.

As we finalize our plans with multiple sclerosis Phase 2 study, we’ll provide more clarity on its design which will be directed for its adjunctive therapy to optimize oral medications and such will differ significantly from a spinal cord injury trial. I would now like to turn the call over to Ryan to discuss the Q2 financial results.

Ryan Daws

Thank you Roger. As Justine mentioned the press release has been distributed so please reference the financial tables contained therein. Looking first with revenue; revenue in the second quarter 2014 was $1.2 million. A majority of our revenue during the quarter was recognition of deferred revenue related primarily to services we performed under our strategic collaboration with Celgene. So the revenue was $17.4 million in the second quarter of 2013.

As a reminder in the second quarter of 2013, we forced our strategic collaboration with Celgene resulting in our receipt of $35 million of payment of which $17 million was immediately recognized as revenue upon delivery of [indiscernible].

Remainder get from payment will be recognized this revenue as we execute on our collaboration. As Roger mentioned, we believe that all of our partnered programs are progressing nicely. And we have the potential to realize approximately $40 million in milestone payments from our partnerships study into next year.

In the third quarter of this year, we expect only $2 million milestone from Avanir for the initiation of investing and the anticipated phase 11 AVP-786 trial filed for major depressive disorder. On the expense side, research and development expenses were $6.2 million for the quarter ended June 30, 2014 compare to $5.8 million for the same period 2013.

Increase in research and development expenses was primarily related to expenses associated with the ongoing phase 1 development of CTP-354 and increased manufacturing cost as we prepare for the phase 2 testing.

As we move 354 into phase 2 development and initiate the first phase 2 clinical trial in spinal cord injury, we expect R&D expenses will increase further. In addition, we expect R&D expenses to increase in the second half of 2014, as JZP-386 and CTP-730 advance into improve phase 1 testing under collaborations with Jazz Pharmaceuticals and Celgene respectively.

General and administrative expenses were $2.7 million for the quarter ended June 30, 2014, compared to $2.3 million for the same period in 2013. The increase is primarily related to expenses associated with operating as a public company. Our second quarter net loss was $8 million or $0.45 per share.

For the quarter ended June 30, 2013, all of the company’s net income was attributed to our shareholders. Accordingly the company’s net income available to common stock holders was zero. We ended with quarter with $98.3 million in cash, cash equivalent and investment. We believe we are well funded to execute on our development strategy.

Justine Koenigsberg

Thank you, Ryan. That concludes our prepared remarks. Kevin, we would now like to open the call for Q&A.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Matt Roden with UBS.

Unidentified Analyst

It’s Andrew in for Matt. Good morning. A question receptor occupancy dates is very interesting can you remind us what your preclinical modeling suggest the 12 milligram repeat this where that would fall on the curve and then I have a follow up?

Roger Tung

Hi, Andrew. Thanks for the question. We really don’t have preclinical modeling for 12 milligram dose although we do have some preliminary modeling from the single dose receptor occupancy study that we did and we assume that we will see pretty high receptor occupancy, and it would be 70% greater.

Unidentified Analyst

And then just in terms of the phase 2 trial design, can you kind of walk through your thoughts on the Ashworth Scale is going to endpoint and based on your early conversations with clinicians, what you think clinically meaningful or important result and where do you see the bar for kind of proof-of-concept for this drug in spasticity.

Roger Tung

Right. Well, the Ashworth Scale as you may know is an accepted scale that has been used in the approval of drugs for spasticity in the U.S. is a physical measurement that is based on physicians assessment of the difficulty of moving, essentially difficulty of motion across a particular joints. It is a scale that has some subjectivity therefore radar (ph) training is important and we will be invoke in ensuring that there is proper radar training in each of the centers which we do a clinical study. As far as clinically meaningful extend of effect on Ashworth Scale that different physicians differ on that question we estimate that a 25% to 30% on improvement in the Ashworth Scale would be meaningful. If we see 30% [indiscernible] we will be very pleased.

Operator

Our next question comes from Joe Pantginis with Roth Capital Partners.

Joe Pantginis - Roth Capital Partners

Maybe just quick start on 354 do you have projected timeline from when we want it to get this phase 2 started?

Roger Tung

But we’ve indicated that we will start it during the second half of this year. It should be coming up in the coming months.

Joe Pantginis - Roth Capital Partners

And then maybe if I could just switch for a couple of questions on 499 so obviously you had some positive feedback based on your end of phase 2 meeting here. So around that I want to get a sense of what we’re some of the, I don’t want to call them issues, but for the sake of this call we will call them any potential issues that might have been discussed and say as rate limiting steps in your discussions and how much did the prior precedence of another company being allowed to do the 50% reduction help with those talks. And then I have a follow-up.

Roger Tung

Well, I think 50% increase in serum creatinine is something that is [indiscernible]. Yes, increases in serum creatinine, some extent it is embedded in already in treatment of kidney disease it’s offers for instance the definition of two kidney injury in Pediatric patients and is in line with FDA’s discussions at the December 24th meeting with National Kidney Foundation, the joint meeting on producing a less expensive barrier to approval for drugs for chronic kidney disease. So it is something that I think that there has been movement for us [indiscernible]. As far as the overall environmental discussions that we had with FDA is we have characterized that previously they were very positive. FDA not only agreed with the idea of using that end point 50% serum creatinine or end stage renal disease end point, has the primary end point for registration study. As we noted, they indicated that we potentially carryout a single Phase 3 study using two different doses of CTP-499 versus placebo as opposed to two parallel of Phase 3 studies.

Further the FDA also agreed with our suggestions that we use high entrance criteria for urinary albumin or UACR on tumors the patient population to increase the likelihood speed of getting an efficacy signal for drug.

Joe Pantginis - Roth Capital Partners

Okay. That’s helpful, thanks. And then I guess you have a lot of I guess valves (Ph) in the area in the background with regard to your desire to not only seek an FDA but as you mentioned going to Phase 3 with the collaborator to the extent that you can discuss I guess first since you have relatively clear guidance for the design of the study why did you decide to seek a special protocol assessment and then does that sort of play into some of your background talks with potential collaborators and maybe some required visibility that they might want and maybe to discuss some level of the maturity of these talks? Thanks a lot.

Roger Tung

With respect to the last question we really don’t project anything with respect to partnering discussions as a general word and certainly with respect to this program we will update you as it is appropriate. With respect to the special protocol assessment in any of that I think we have wanted the clarity of special protocol assessment since this is an area in which there has been some movement in the regulatory bar over the course of the past couple of years. But in particular, now that we are talking about the potential for single Phase 3 study understanding exactly how the FDA would like to see the statistical analysis done and have an agreement with them and what would be required is something that I think would be important for us. We’re very pleased that they do not seem to be concerned about the safety of the drug and there was no requirement that we create an unusually large safety data base for the compound but we would still like to understand the statistical analysis of the compound.

Operator

Our next question comes from Brian Abrahams with Wells Fargo Securities.

Brian Abrahams - Wells Fargo Securities

Thanks for taking my questions. A couple of questions on 354, Roger you talked a little bit about the tolerability with the repeat doses of 6 milligrams I was wondering if you can maybe contextualize that a little bit further in terms of the side effect you saw relative to single doses of 20 mgs which I think was where you had sort of math the proper balance with respect to occupancy and the tolerability. And also relative to what you expect to see after-market benzos (Ph) that their effective dose -- repeated doses.

Roger Tung

Excellent question Brian, those are very good questions with respect to the 20 milligram doses we saw in the receptor occupancy no side effects. In single dose study that we’ve done, we did see neurologic adverse effects in several subjects including dizziness and sleepiness subjects.

I believe although we have to confirm that those were mild in that patient population. So the fact that we saw some initial mild sleepiness and dizziness in patients in the subjects in repeated dose open label study that result in the first few days was in our view of positive not unexpected. The effect of the side effects resulting is of course positive indicating that there may be some increased tolerability of the drug even if individuals have initial effects from the compound. And we’ll note that this is an open label study and both subjects were told that they were being given in neurologic compound that could cause sleepiness and dizziness.

So that should be taken into account that there was no double-blinding and no placebo-controlled study. Now as far as the benzodiazepines are concerned although a number of them are used for the treatment of spasticity including [indiscernible] which is probably the most broadly used and has the label for treatment of spasticity. Those compounds are actually rarely used for the treatment except for nighttime dosing to prevent our nighttime spasticity and cramps because of the strong sedation that’s seen with the compounds.

We believe that the effect size of the benzodiazepines is quite similar to that of the other oral medications baclofen and tizanidine but again due to the excess of sedation seen with benzodiazepines which is greater than those other compounds it tends not to be used.

Brian Abrahams - Wells Fargo Securities

Got it and can you talk about the bar for where you’re aiming to get to in terms of receptor occupancy I think you’re at around 50% now, your modeling suggests you get to that 70% or more with the 12 milligram dose, how should we think about what’s the right bar that you think would predict efficacy where we obviously want to see side effect that look more mild than you what you would expect from us and traditional benzo (Ph)?

Roger Tung

Sure, first of all I’ll just note that the subjects in this study are 50% receptor occupancy is 6 milligrams for pretty hefty guys with an average weight of over 220 pounds and there is probably some relationship between plasma levels and body mass. So, we may try to see our rather higher blood levels and corresponding receptor occupancy in subjects where are closer to the average body weight for our subject base.

As far as - where we need to get to what we know is that with benzodiazepines label to doses of Valium for instance are 5 to 10 milligram dose several times per day between two and four times per day. We know that a 30 milligram dose of Valium which is highly sedating, provides approximately 20% to 25% receptor occupancy which is probably as high or higher than the highest tolerable doses of that drug in fact I think it is probably significantly higher.

So the fact that we are already edge 50 plus percent receptor occupancy with CTP-354 supports our view that we stated previously that 6 milligrams is probably enough to be able to treat spasticity. Because this has a novel receptor subtype, in fact what we want to do in the Phase II study is get a better understanding of the relationship between exposure and response for pharmacokinetics and pharmacodynamics and that is the reason that we’re going to be studying three different dose levels of CTP-354 and understanding whether there is a positive slope that allows us to do estimate and effect size which would be clinically meaningful that we can target for Phase III studies.

Brian Abrahams - Wells Fargo Securities

Got it, more and more question on 354, if I may, you mentioned the lack of brain accumulation just wondering if the plasma levels support the half-life of I think you mentioned about 17, 18 hours would be expectation there whether that’s it can be what you are seeing with this repeat dose study and if it’s supportive to the potential potential dosing?

Roger Tung

We did not study pharmacokinetics specifically or plasma pharmacokinetics specifically in the study however, I should say that the brain receptor occupancy was quite long in this we measure the receptor occupancy 48 hours after the last dose it’s still shows the potential of occupancy two days after the final dose. So I believe that we are seeing what we expected to see which is a very long half-life not accessibly long but long enough to clearly support once-daily dose.

Brian Abrahams - Wells Fargo Securities

Got it, and then just one quick one on 499, now that you’ve quite a bit of additional FDA feedback in hand, how do you think about pursuing partnership versus the potential to take 499 forward on your own? Thanks.

Roger Tung

As I indicated in the remarks previously, we do intend to partner 499, given the magnitude in size of that study. We are encouraged that because of the enrichment that’s possible with our patient population comprising those individuals with particularly high urinary albumin and the potential necessity for only a single placebo control arm that, that will help to make this study more efficient and reduce cost. So, we think that could play into the attractiveness of the program in the partnership context.

Operator

Your next question comes from Mike King, JMP Securities.

Mike King - JMP Securities

Alright, sure about that, just wanted to ask a bit about sort of process of the SPA and how this may have been as I apologize that I’ve been jump it back and forth between two calls but just how long you think the FDA process will take and when we might see first patient in Phase III for 499? Thanks.

Roger Tung

Thanks for the question Mike. As far as the SPA process is concerned, what we have stated is that we intent begin discussions with FDA regarding infrastructure protocol assessment this year. As I mentioned earlier, one of the key aspects of that is getting our arms around this statistical analysis given that we are potentially switching from two parallel phase 2 studies to a single phase 3 studies for the registration of the compound. As far as first patient in its concerned that is something that will as noted based on our ability to run the compound for in collaboration with the partner the timeframe from an SPA is always a little bit uncertain because of the long cycle time between the FDAs comments on any submission by the sponsor requiring about 45 or having about 45 day cycle time. So because of that each round of discussions phrase a substantial incremental time for our regions, historically they’ve taken anywhere between happier and well over a year. So it’s really something we wouldn’t care to project it at this time.

Mike King - JMP Securities

Can you talk about the need to have SPA I mean I know we’re trading a little bit regulatory grounded not yet been broken but if the FDA were willing to accept less stringent requirement than previously expected and 0.9 could meet that cash it would seem like there’s not a lot of debate about that or is it more about having the one single trial supporting approval that prompts you to do the SPA?

Roger Tung

We are very interested in nailing down with statistical analysis would be and ensuring that the size of the study that we’re doing is adequate for approval of the compound. We had a great end of phase 2 meeting with FDA and the participants in the room which included multiple office level participants not only those in the division. Those people are clearly very supportive and very interested in getting compound approve for the treatment of chronic kidney disease they are very clear that there’s a real unmet need and that’s there’s a password for compound that backing them the disease having said that it’s also the case that as with any organization per snail change or time, and given that we would embarking that on a long phase 3 program we want to ensure that all participants agree to that we’re, that I should say that has the agreement that we reach with the current personal at FDA is honored by those union out later.

Mike King - JMP Securities

And then just coming back to 354, again you may have addressed it but, I want to just ask couple of questions on that. Have you said what the incremental doses are going to be are you going to be those escalating in 6 milligram increments number one. And number two 30% improvement in Ashworth pretty high bar. I assume that was number that you were told by your KOLs. It is considered clinically relevant but just maybe talk a little bit about kind of how that bar was set?

Roger Tung

Sure, as I indicated we think about 25% to 30% is the kind of range that we would want to see coming out of the phase 2 studies or at least the ability to project and kept to that kind of change in Ashworth scale. We think that’s, if we gets to that kind of range, particularly the upper end of it, that there will really be no question about the utility in that because of the compound is possible that based on excellent tolerability that a less extensive efficacy might still be commercially viable and attractive, but we really need to see the response that we get both on the adverse respect profiles as well as the efficacy to fully nail down what we think of the overall profile of the drug. As far the dose escalation is concerned, we are now dosing 12 milligrams. We anticipate that that will be our top dose. We did not that in the single sending dose study as we got to above 80% receptor occupancy that there were adverse effects that we noted in number of subjects. And we are targeting about that range about the 80% ranges being the one that we wouldn’t want to go above in our dose acceleration. We may well be hitting north of 70%, we would -- said that with the 12 milligram dose and so we intent to sort there.

Operator

(Operator Instructions) Our next question comes from Bert Hazlett with Ladenburg.

Bert Hazlett - Ladenburg

If you want me to go ahead move on to the next question?

Roger Tung

Sure.

Operator

Our next question comes from Mike King with JMP Securities (Operator Instructions) Mike King, your line is open.

Justine Koenigsberg

I think we may have addressed Mike’s questions already.

Operator

Okay. And then I’ll re-queue to join -- one more time. Bert your line is open.

Bert Hazlett - Ladenburg

You got it?

Justine Koenigsberg

[Indiscernible]

Bert Hazlett - Ladenburg

Okay. Sorry about that. Thank. A couple of -- just a big picture question or two, what spasticity in spinal cord injury initially versus spasticity or other spasticity settings and I have one or two others. Thanks, sorry about the phone.

Roger Tung

Well, with respect to spinal cord injury we believe that this is a patient population that has pretty stable exhibition of spasticity. The course of spasticity occurring in subjects or patients secondary to spinal cord injury is well described in the medical literature it tends to be pretty stable and we believe that stability will help in being able to assess the effect size in a relatively small number of patients. We are, as we indicated planning to study spasticity in both spinal cord injury patients and in multiple sclerosis patients, in two studies one beginning in the next few months and the other starting next year.

The multiple sclerosis study will probably involve a longer course of treatment and as such is one that who want to have greater toxicology coverage for which we’re now accumulating. We are aware that in general beliefs that any agent would successfully treat spasticity will is belief to treat spasticity from all causes not just spinal cord injury or multiple sclerosis. So there is potentially the ability to use the CTP-354 if it’s successful in those indications, in other forms of spasticity such as throughput policy and spasticity secondary stroke which was significantly large populations but there are also more defused in terms of our reach in case of strong patients and in [indiscernible] patients that is largely a pediatric population that we want to have significant amount of clinical experience with 354 before moving from adults to pediatric patients.

Because of the utility of spasticity agents across different forms of spasticity there is a substantial potential expansion population in those patients. I’ll also note as we’ve discussed before given the GABA(A) mechanism of compound that’s anxiety and other indications that are responsive to GABA(A) modulation including possiblly chronic pain and possible procedures would be other indications and with 354 may have expansion potential.

Bert Hazlett - Ladenburg

Well, thank you Roger for that. That’s exactly where I was headed. Can you talk about to getting items to consider those additional indications more formally?

Roger Tung

We have the resources right now, both monitory and personnel to carry out the studies that we’re doing including JZP-386 soon CTP-730, CTP-354 and that’s pretty well taking up the resource that we have available. We are excited about those other indications for 354 and we’d like to in and do course pursue them but we just don’t have the [indiscernible] right now.

Bert Hazlett - Ladenburg

Okay, thank you. And the last one, we’ve discussed Celgene in general terms obviously with -- could you describe the nature of collaboration in terms of the working relationship with Celgene. Can you talk about how the study is being conducted, how much you’re involved with it in terms of the hands on aspects, how much they’re involved with just a general operating structure and could you remind us when we might actually potentially see that Phase 1 data?

Roger Tung

Thanks for the question. We have indicated that we are going to be starting the study this year and we are very much on track to do that. We haven’t indicated the back end of the study. We have stated that the milestone coming out of the end of Phase 1 would be likely a 2015 of event, but we haven’t actually guided specifically on release of Phase 1 data. So we are conducting the study, we’re fully in-charge of it, we work closely with Celgene to get our guidance and ensure that the product that we’re producing in terms of the clinical evaluation of the compound meets their interest and expectations I would describe our relationships with - we have a very close working relationship and are in good contact with each other but it is entirely under our for - conducted study.

Bert Hazlett - Ladenburg

Okay, thank you for that and just lastly you’ve mentioned the pattern portfolio in the press release and your progress there globally as well as in the U.S., how do you think about other assets manifesting themselves, you clearly have along on your place here with 354 and 499 in the collaborations. How do you prioritize moving additional assets into the clinic, how do we think about maybe when those types of events might occur?

Roger Tung

Yes, we have indicated that, we would like to find another weak candidate this year and we are very much on track to do that, we believe that we’ve the ability to put it into the clinic or probably within the 2015 timeframe. So, the intention is to continue expanding our pipeline and we’ve given the issuances that we’ve gotten the increasing clinical data that we are pulling with our different deuterium modified assets and the essentially identity of pharmacological benefit of the compounds that we’ve seen today with the non-deuterated compounds we think that we have the ability for a robust and continued ever bringing the pipeline.

Bert Hazlett - Ladenburg

Okay, but that sounds like it’s a little further out to what we see something in 2014 and does that mean that it’s moving into the clinic in ’14 or maybe a little further out?

Roger Tung

We haven’t decided that we’re moving into ’14 with the new assets.

Operator

And I’m not showing any further questions at this time, I’d like to turn the conference back over to our host.

Justine Koenigsberg

Thank you very much for joining us everyone, we look forward to keeping you updated on our progress. Have a nice day.

Operator

Well, ladies and gentlemen, that concludes today’s presentation. You may now disconnect and have a wonderful day.

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